UPDATE 3-Tronox's U.S. operations file for Chapter 11

(Adds details on legacy costs, background)

NEW YORK, Jan 12 (Reuters) - Tronox Inc's TROXA.PK U.S. operations have filed for Chapter 11 bankruptcy protection to address environmental remediation and litigation costs, the chemical maker said on Monday.

The producer of titanium dioxide pigment used in paint, plastics and paper has assets of about $1.56 billion and liabilities of about $1.22 billion, it said in its filing with the U.S. Bankruptcy Court in Manhattan.

Tronox and other chemical makers have been hit by a major decline in demand from the automotive and construction industries in the deepening global recession.

Last week, the U.S. operations of LyondellBasell, the world's third-largest petrochemical company, filed for bankruptcy protection under the weight of massive debt and declining demand.

"After careful evaluation of all strategic alternatives, we have concluded that a Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," Chief Executive Dennis Wanlass said in a statement.

The company, based in Oklahoma City, said it had taken steps to ensure a supply of goods and services to its customers, and had a commitment for up to $125 million in new debtor-in-possession financing from its existing lending group led by Credit Suisse (CSGN.VX).

Companies use DIP financing to help them fund operations while they restructure debt.

Tronox said it would use the financing to pay vendors for all goods and services provided after the filing date.

The company said the filing did not include non-U.S. operations in Australia, Germany and the Netherlands. The company employs about 1,845 people, with almost 1,000 of those in the United States.

Tronox expects to receive approval to continue to pay employees as part of the bankruptcy court's "first day" orders, it said.

LEGACY COSTS

Tronox said it had been required to incur the legacy liabilities, including environmental remediation and litigation costs, when it was spun off by Kerr-McGee Corp in 2006.

According to Tronox's court filings, prior to the spin-off Kerr-McGee isolated most of its liabilities from its former discontinued operations into its chemical business, regardless of their source.

Prior to the spin-off, Kerr-McGee tried to sell the chemical business, but potential buyers were concerned about the legacy liabilities that would be included, Tronox said.

Tronox maintains that the legacy liabilities it has shouldered are almost entirely unrelated to its core titanium dioxide operations.