Lyondell creditors ask court to appoint examiner to investigate refinancing refusal

By Caroline Salls

Pittsburgh, Oct. 5 - Lyondell Chemical Co.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Southern District of New York to appoint an examiner for the company's bankruptcy case, according to a Friday court filing.

Specifically, the committee said an examiner should be appointed to investigate the company's "selection of a conflicted rights offering sponsor," its refusal to refinance its debtor-in-possession facility and its refusal to propose a reorganization plan that includes a reserve for unsecured creditors pending resolution of a committee lawsuit.

According to the motion, "the debtors' prepetition secured lenders, in concert with Leonard Blavatnik and entities controlled by him, orchestrated the busted leverage buyout that culminated in these bankruptcy proceedings."

As previously reported, the committee has filed a lawsuit in an attempt to avoid the lenders claims and liens.

The committee said Lyondell has now selected the lender defendants to provide DIP financing even though the lenders are using that vehicle to attempt to stifle the lawsuit.

In addition, the committee said the company has chosen Blavatnik to serve as the principle rights offering sponsor through Access Industries, Inc.

"The debtors have surrendered their impartiality and independence in favor of allowing the outcome and timing of these cases to be dictated by the prepetition wrongdoers who are defendants in the committee action," the committee said in the motion.

The committee said Lyondell is forced to reorganize quickly because of the impending maturity of the DIP facility imposed by the lawsuit defendants.

A hearing is scheduled for Oct. 14.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company. LyondellBasell's U.S. operations and one of its European holding companies filed for bankruptcy on Jan. 6, 2009. The Chapter 11 case number is 09-10023.

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