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Lyondell creditors committee asks to conduct discovery related to merger with Basell
By Jennifer Lanning Drey
Portland, Ore., March 9 - Lyondell Chemical Co.'s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Southern District of New York for authorization to conduct discovery related to the merger between the company and Basell, according to a Monday filing.
The creditors committee said given the considerable debt incurred in connection with the merger, the amount paid to shareholders in the merger and the almost immediate liquidity crisis that followed the merger, the transaction and surrounding circumstances must be scrutinized for fraudulent transfer and other potential liability.
The committee is seeking discovery from lenders and other parties to the senior secured credit facility, lenders and other parties to the senior secured inventory-based credit facility, counterparties under the accounts receivable securitization facility and lenders and other parties to the bridge loan facility.
In addition, the committee seeks discovery from shareholders who owned more than 5% of Lyondell common stock at the time of the merger.
The committee also asked to conduct discovery on merger counsel and third-party advisors.
The committee said the limited investigation it has conducted thus far in the bankruptcy case shows that Basell's acquisition of Lyondell was funded with 100% debt financing and burdened Lyondell with $20 billion in secured debt.
The creditors said the merger was undertaken to achieve perceived business opportunities and savings but was plagued with difficulties and liquidity issues from the beginning.
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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