The U.S. Bankruptcy Court for the Southern District of New York issued a ruling on Thursday that could result in a damage award to Tronox Ltd. (NYSE: TROX) of as much as $14.5 billion from Anadarko Petroleum Co. (NYSE: APC). The litigation is related to a 2009 bankruptcy filing by Tronox Inc., the predecessor to Tronox Ltd., in which Anadarko filed a claim as a creditor.

Tronox Inc. was spun off Kerr-McGee in 2005, and the latter was acquired by Anadarko in June 2006 for about $18 billion including debt. Tronox, a chemicals manufacturer, sued Anadarko, claiming that Kerr-McGee had improperly ladled 85 years worth of environmental liabilities onto Tronox in order to clean itself up for the Anadarko takeover.

Anadarko issued a statement saying that it plans to continue contesting the court’s decision:

Given the significant factual evidence supporting our position, we vehemently disagree with the Judge’s Memorandum of Opinion, and we fully expect to pursue every avenue available to us through the appellate process to protect the interests of our stakeholders, once a final judgment including damages has been rendered.

According to Anadarko, the court ruled that in its position as a creditor the company “should provisionally have an allowed claim [offset] … in the amount of $10.459 billion” once a yet-to-be-settled issue regarding its right to an offset is decided. The court calculated that if the offset is allowed, Tronox would be paid about $5.15 billion. If Anadarko is not granted the offset, the damages could rise to $14.166 billion.

The court has allowed 60 days for both sides to submit briefs on the offset issue and has also invited oral arguments.

Anadarko shares were trading down 8.6% Friday morning, at $76.47 in a 52-week range of $71.77 to $98.47. Shares of Tronox were trading up more than 6%, at $22.43 in a 52-week range of $15.55 to $26.99.

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