22 July 2009 23:47 [Source: ICIS news]
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HOUSTON (ICIS news)--A group of creditors on Wednesday sued the lenders, executives and former board members of Lyondell Chemical, accusing them of driving the company into bankruptcy in roughly a year after its merger with Basell.
The creditors said the merger was funded entirely with debt. "Every dollar of the $22bn used to acquire Lyondell and to fund the approximately $1bn in transaction fees, paid out to affiliates, advisors, and professionals in connection with the acquisition, was borrowed money," the creditors said.
"Every dollar of the $22bn used to acquire Lyondell and to fund the approximately $1bn in transaction fees, paid out to affiliates, advisors, and professionals in connection with the acquisition, was borrowed money," the creditors said.Earlier, the group received permission from the US bankruptcy court to file the lawsuit.
The lawsuit names several prominent officers in the merged LyondellBasell, including Ed Dineen, chief operating officer; Alan Bigman, chief financial officer; and Bart de Jong, president of the North American operations.
Also named are Leonard Blavatnik and his industrial group, Access Industries. Access owned Basell at the time of the merger.
In the lawsuit, the creditors alleged that the merger left the combined firm with excessive debt.
"The debtors' inability to fund their operations," the creditors said in the lawsuit, "was the entirely foreseeable and direct consequence of the merger."
The deal left LyondellBasell insolvent, leaving it undercapitalised and incapable of paying its debts on time, the creditors said.
The lawsuit does not name Lyondell Chemical and other US operations that filed for bankruptcy protection earlier this year.
In a statement, Lyondell spokesman David Harpole said, "LyondellBasell remains optimistic that the parties in the lawsuit will resolve their differences in a timely matter so the company's plan for reorganisation can be confirmed on an expedited basis."
Lyondell plans to present its reorganisation plan to the court by 15 September, Harpole said.For more on LyondellBasell visit ICIS company intelligence
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