Solutia unsecured creditors' motion to reduce 2009 noteholder claims denied due to lack of jurisdiction

By Jennifer Lanning Drey

Portland, Ore., Dec. 11 - Solutia Inc.'s official committee of unsecured creditors' motion to reduce the amount of the claim allowed to the company's senior secured noteholders was denied on Monday by the U.S. Bankruptcy Court for the Southern District of New York, according to a source familiar with the case.

The committee had asked the court to reduce the 2009 11¼% noteholders' allowed claim to $187.4 million from $223.0 million on the grounds that the claim was exaggerated.

According to the source, judge Prudence Carter Beatty denied the motion on the grounds of lack of jurisdiction because the indenture trustee for the 2009 noteholders has appealed a previous decision in which Beatty already ruled that the principal amount of the 11¼% senior unsecured notes was actually $187.4 million, not $223.0 million.

The trustee's appeal was made to the U.S. District Court in Manhattan.

Beatty felt the unsecured creditors committee's motion implicated her previous order, the source said.

Solutia, a St. Louis-based manufacturer and provider of performance films, specialty chemicals and an integrated family of nylon products, filed for bankruptcy on Dec. 17, 2003. Its Chapter 11 case number is 03-17949.

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