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Lyondell creditors ask court to discontinue lender protection payments
By Caroline Salls
Pittsburgh, Dec. 23 - Lyondell Chemical Co.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Southern District of New York to discontinue adequate protection payments for the first-lien lenders under the company's debtor-in-possession facility, according to a Wednesday court filing.
The committee said the first-lien lenders have "steered this restructuring to their exclusive benefit" since the DIP loan order was entered and, in the process, have improperly received hundreds of millions of dollars in post-bankruptcy interest payments and reimbursement of expenses as adequate protection payments.
However, the committee said the parties-in-interest in Lyondell's case have since improved their understanding of the company's enterprise value and the value of the collateral securing the first-lien debt and DIP facility.
As a result, the committee said the first-lien lenders are under-secured and will have their claims equitized under Lyondell's plan of reorganization, and the adequate protection payments should be discontinued.
"These payments totaling at least $472 million provide no benefit to the estate and only provide a windfall to the first-lien lenders," the committee said in the motion.
"In essence, each dollar paid to first-lien lenders and their advisers is a dollar increase in needed exit financing because of the drain of available cash on hand and the liquidity needs of the reorganized debtors."
A hearing is scheduled for Jan. 12.
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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