Solutia equity committee objects to exclusivity extension in light of 'flawed' settlement-based plan

By Caroline Salls

Pittsburgh, July 23 - Solutia Inc.'s official committee of equity security holders objected to the proposed extension of the company's exclusive period to file a plan of reorganization, arguing that after 11 previous extensions, the company can no longer say it has not had ample time to file a plan, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said it intends to object strongly to the Monsanto Corp. settlement that forms the basis of what it called the "fundamentally flawed" Solutia plan.

According to the objection, Solutia has not been successful in obtaining approval of its disclosure statement because it continues "to insist on presenting a one-sided and misleading description and justification of the Monsanto settlement without making a complete presentation of the relevant facts."

In addition, the committee said a modified sale plan and/or investment-based plan could lead to full recovery for unsecured creditors and a "meaningful" recovery for public shareholders.

"In light of the debtors' unwillingness and inability to move forward toward confirmation in an efficient manner and with a confirmable plan, the time has come to finally allow other stakeholders to propose confirmable, alternative plans," the committee said in the objection.

The committee also proposed that plan vote solicitation be halted until the court rules on the Monsanto settlement. A hearing to approve the settlement is scheduled for Sept. 5.

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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