Lyondell obtains preliminary injunction protecting parent for only 60 days

By Rebecca Melvin

New York, Feb. 26 - Lyondell Chemical Co. obtained on Thursday a 60-day restraining order that prevents pre-petition creditors and the 2015 noteholders from pursuing remedies, including involuntary insolvency proceedings against Lyondell's Dutch-based parent, LyondellBasell Industries AF SCA.

The ruling by judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York fell short of Lyondell's request for injunction until confirmation.

Gerber said the length of time granted should be sufficient for the filing of additional voluntary insolvency proceedings in the U.S. or abroad.

The two months should "protect the debtors from the disruption of their integrated European operations and a default on their DIP financing facility - each of which is a very major concern, and would otherwise be serious risks if I failed to act," Gerber said in a written opinion.

"Some, but not all, of the damage the debtors fear is a matter of serious concern. But injunctions of the breadth and duration that the debtors request raise material public interest concerns, potentially prejudicing some creditors vis-à-vis other creditors and impairing the value of guaranties in major commercial transactions - with the result that an injunction of the breadth and duration requested here would represent an excessive exercise of the power that I undoubtedly have to interfere with creditors' rights against nondebtor parties," Gerber stated.

The 2015 noteholders are holders of the €500 million and $615 million 8 3/8% senior notes due 2015 issued by LyondellBasell Industries.

The order protects LyondellBasell and its affiliates from attempts to accelerate its guaranty claims and its €500 million and $615 million 8 3/8% senior notes.

The preliminary injunction also keeps the guaranty claimants and noteholders from taking control of any LyondellBasell property or proceeds or continuing any related legal proceedings.

Lyondell is a U.S. subsidiary of LyondellBasell, 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. The Chapter 11 case number is 09-10023.

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