Lyondell files lawsuit to protect French affiliate from settlement payment garnishment

By Caroline Salls

Pittsburgh, March 3 - Lyondell Chemical Co. filed a lawsuit Monday against Air Products LP, Air Products LLC, Air Products Chemicals Europe, BV and Air Products and Chemicals, Inc. in an effort to keep the defendants from garnishing bank accounts of some French non-debtor affiliates for the payment of a debt owed by Lyondell.

According to the complaint filed Monday in the U.S. Bankruptcy Court for the Southern District of New York, the defendants are improperly attempting to collect payments owed under a settlement agreement from Lyondell Chimie TDI, SCA and Lyondell Chimie's managing entities, Lyondell France Holdings SAS and Lyondell Chimie France SAS.

Lyondell said the French non-debtor affiliates were not parties to the underlying lawsuit resolved via the settlement agreement.

"The settlement agreement contains no provisions specifying that there is any joint liability or guarantee on Lyondell Chimie's part to make Lyondell's settlement payments to resolve a lawsuit, to which Lyondell Chimie was never a party," Lyondell said in the complaint.

Lyondell said the settlement in question stems from a dispute related to Lyondell's announcement in the fall of 2005 that it was ceasing some operations at its Lake Charles Facility, and, in turn, no longer purchasing toluenediamine (DNT) from the Air Products entities.

Under the settlement, Lyondell said it agreed to make an initial payment and several subsequent installment payments to Air Products, including a $7.64 million payment due Jan. 30.

Shortly after receiving the 2009 final invoice, Lyondell said it told Air Products that it was not in a position to make the installment payment as a result of its bankruptcy case.

On Feb. 5, without first contacting Lyondell Chimie, Lyondell alleged that Air Products' counsel filed a request for garnishment of credits in the Court of First Instance of Aix en Provence, Bouche du Rhone, France.

In the garnishment request, Lyondell said the defendants sought a garnishment of Lyondell Chimie's assets in the amount of $27.64 million, arguing that Lyondell Chimie is jointly obligated under the settlement agreement.

The French court granted the garnishment request, but Lyondell said Lyondell Chimie does not have enough assets to satisfy the garnishment order, to fund a defense to any actions taken by defendants to obtain a final judgment on the settlement agreement or to pay any final judgment.

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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