Solutia says it may keep some legacy liabilities under its reorganization plan

By Jeff Pines

Washington, Aug. 5 - Solutia Inc., which filed for Chapter 11 because of its legacy liabilities, may keep some of them under its reorganization plan, the company said in its 10-Q filed with the Securities and Exchange Commission Thursday.

Monsanto, Solutia's former parent, spun off the company in 1997 but made it assume healthcare, life and disability insurance and pension costs, environmental remediation and compliance, asbestos and general liability claims as well as litigation related to sites allegedly contaminated by Monsanto. Solutia was forced to indemnify Monsanto against any liability, according to paperwork filed with the U.S. Bankruptcy Court for the Southern District of New York.

The legacy liabilities cost Solutia about $100 million each year. About $60 million of this is in pension costs to about 20,000 retirees who worked for Monsanto and not Solutia, according to the court filing.

Solutia has until Oct. 12 to exclusively file a reorganization plan and until Dec. 11 to exclusively solicit votes for the plan unless it files for and obtains another extension.

The St. Louis-based chemical company filed for bankruptcy on Dec. 17, 2003. Its Chapter 11 case number is 03-17949.

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