Lyondell creditors fight 'premature' push toward plan confirmation

By Caroline Salls

Pittsburgh, Jan. 27 - Lyondell Chemical Co.'s official committee of unsecured creditors objected to the company's disclosure statement, arguing that Lyondell is trying to rush to plan confirmation "in hopes that it will roll over the committee and its just concerns," according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said the company's request for approval of the disclosure statement is premature because the plan of reorganization and disclosure statement both depend on approval of a proposed lender lawsuit settlement.

However, the committee said the hearing on the settlement will not even be held until after the disclosure statement hearing.

"Should the debtors' motion for approval of the proposed lender litigation settlement be denied, the time and resources devoted to the debtors' premature attempt to obtain approval of the disclosure statement will have been wasted," the committee said in the objection.

The committee said the proposed reorganization plan unlawfully gives senior secured lenders, bridge lenders and the holders of Arco and Equistar note claims a total of $17.8 billion in uncapped claims against some Millennium entities, "even though the guarantees upon which such claims are premised were contractually limited, by the committee's calculation, to no more than $110 million."

The committee said the Arco and Equistar noteholders have no right to a pre-bankruptcy claim against the Millennium entities.

In addition, the committee said the plan fails the best interests of creditors test because it transfers Chapter 5 avoidance actions to the reorganized company, which the committee said will most likely not prosecute them, "thus wasting their potential value."

In a liquidation, the committee said general unsecured creditors would receive their share of the proposed lender litigation settlement, as well as some benefit from the liquidation of other Chapter 5 avoidance actions.

The committee also said the disclosure statement does not give creditors enough information.

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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