TimelineLyondell’s path through US bankruptcy protection

30 April 2010 20:57  [Source: ICIS news]

HOUSTON (ICIS news)--When Lyondell Chemical merged with Basell in December 2007, it anticipated becoming a global leader in the petrochemical industry, noting that the deal had created the third-largest independent chemical company.

But when credit markets tightened amid the global economic recession and demand for petrochemicals collapsed, the liquidity of the merged LyondellBasell was constrained. With consolidated debt of $24bn (€18bn), Lyondell filed for bankruptcy in January 2009.

Despite lawsuits and repeated takeover talk involving India’s Reliance Industries, Lyondell continued to go forward with its goal to emerge from bankruptcy protection via internal restructuring.

On Friday, Lyondell’s journey of nearly 16 months under bankruptcy protection concluded with its official emergence, one week after a bankruptcy court approved its reorganisation plan.

The following timeline lists the events that led up to LyondellBasell’s emergence from bankruptcy protection.

30 April 2010: LyondellBasell leaves Chapter 11 bankruptcy protection.

23 April 2010: A US bankruptcy court confirms LyondellBasell’s reorganisation plan, which includes a court-approved equity offering, several settlements with creditors and environmental regulators and a plan to be listed on the New York Stock Exchange (NYSE) in the third quarter.

31 March 2010: LyondellBasell seeks a $1.35bn environmental settlement related to the contamination of several sites, for which state and federal regulators had filed claims against the company seeking roughly $5.5bn.

11 March 2010: A US bankruptcy court approves a string of motions critical to LyondellBasell’s reorganisation plan, including its disclosure statement, a $450m partial settlement with creditors and its equity offering. Afterward, LyondellBasell announces plans to raise $3.25bn through a combination of private placement of secured notes and term loans as it prepares to emerge from bankruptcy protection. The fresh funds would be used to partly repay existing debts.

8 March 2010: LyondellBasell rejects a $15bn takeover bid from India’s Reliance Industries, concluding it was neither higher nor better than its reorganisation plan. 

16 February 2010: LyondellBasell announces that a partial $450m settlement has been reached to satisfy a dispute with unsecured creditors, who alleged that the lenders and company officers behind the 2007 merger drove LyondellBasell into Chapter 11 bankruptcy protection by saddling it with debt. Under the deal, the lenders can still pursue the officers.

8 January 2010: India’s Reliance Industries raises its offer to acquire LyondellBasell by $1.5bn. Later, Reliance would increase its bid to nearly $15bn.

23 December 2009: An executive summary by an examiner on the business judgments of several aspects of the LyondellBasell bankruptcy lists no red flags.

14 December 2009: LyondellBasell files an amended reorganisation plan calling for a $2.8bn rights issue while paying a maximum of $428m in administrative, tax and other priority claims and repaying the new money portion of its debtor-in-possession (DIP) loan in full.

12 December 2009: Reports surface that top executives with LyondellBasell and India-based Reliance Industries met in Houston amid talks for Reliance to buy a controlling stake in LyondellBasell.

10 December 2009: LyondellBasell proposes for creditors to settle their lawsuit against lenders for $300m, which creditors say is “woefully inadequate”. LyondellBasell will later increase the settlement's value to $450m. The creditors’ committee requests the right to file a competing reorganisation plan in which LyondellBasell would be sold for cash to Reliance.

23 November 2009: Reports surface of a $9bn-12bn bid for LyondellBasell by India-based Reliance Industries.

26 October 2009: A US judge approves the appointment of an examiner to conduct a limited review of LyondellBasell’s bankruptcy.

23 September 2009: LyondellBasell downplays media reports about India’s Reliance Industries’ interest in buying the company and reiterates its plan to exit bankruptcy protection.

14 September 2009: LyondellBasell says it will once again become a public company with shares traded on the New York Stock Exchange under its plan to emerge from bankruptcy protection.

13 September 2009: LyondellBasell announces it plans to emerge from bankruptcy near the end of 2009 by forming a new holding company.

8 September 2009: The US bankruptcy court approves LyondellBasell’s choice of Kent Potter as chief financial officer, despite the objections of creditors over his ties with parent company Access Industries.

26 August 2009: The US bankruptcy court approves multi-million-dollar bonus plans for executives, managers and employees at the company.

22 July 2009: Creditors are given court permission to sue the lenders, executives and directors involved in the Lyondell Chemical and Basell merger. The lawsuit alleges that they focused on million-dollar payouts despite clear signs that the company would go bankrupt

17 June 2009: Creditors request court permission to sue the lenders and officers involved in the merger, alleging that the debtors’ inability to fund operations was entirely foreseeable and a direct consequence of the deal.

8 May 2009: LyondellBasell adds 13 non-operating US subsidiaries to its bankruptcy protection filing.

24 April 2009: LyondellBasell adds its Luxembourg-based holding company to its filing under Chapter 11 bankruptcy protection to shield the European affiliate from claims by financial and US trade creditors.

9 April 2009: LyondellBasell announces additional plant closures worldwide as part of a plan to lift cost savings by $700m and successfully emerge from bankruptcy protection.

17 February 2009: LyondellBasell confirms it failed to make interest payments on two European bonds due on 15 February, for which multiple credit watchdog groups downgraded the company.

8 January 2009: The US bankruptcy court approves up to $100m in emergency financing to Lyondell in order to prevent a sell-off of assets.

6 January 2009: The US operations of LyondellBasell and one of its European companies file for bankruptcy protection in the US, listing debts of $19bn and assets of $27bn.

5 January 2009: LyondellBasell continues negotiating with banks over a $281m loan payment due on 4 January

31 December 2008: LyondellBasell confirms that filing for Chapter 11 bankruptcy protection is an option being considered as it looks to restructure its debt.

30 December 2008: Two major credit ratings services downgrade ratings for LyondellBasell amid confirmation that it is restructuring its debt, with one noting that the company was in default on some of its loan payments.

20 December 2007: Lyondell Chemical and Basell complete their $19.4bn merger, forming LyondellBasell Industries – the third-largest independent chemical company in the world.

source: news reports, court documents

($1 = €0.76)

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By: Ben DuBose
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