NEW YORK — (Mealey’s) The federal bankruptcy judge in New York overseeing the Chapter 11 reorganization of Lyondell Chemical Co. — the parent company for Millennium Holdings, which is a defendant in lead paint litigation — confirmed Lyondell's reorganization on April 30, and the company emerged from bankruptcy (In Re: Lyondell Chemical Company, No. 09-10023, Chapter 11, S.D. N.Y. Bkcy.).
Lyondell filed for Chapter 11 bankruptcy on Jan. 6, 2009. As a result, an underlying lawsuit related to allegations of lead poisoning in Wisconsin was stayed.
The notice of confirmation, handed down Friday by U.S. Bankruptcy Judge Robert E. Gerber of the Southern District of New York Bankruptcy Court, made official details that were tentatively agreed to on April 23.
In a statement on Lyondell's Web site, the company said it emerged from Chapter 11 with a "significantly improved financial position," with approximately $5.2 billion of net consolidated debt and approximately $3 billion of opening liquidity. As part of its exit financing, the company raised $3.25 billion of first priority debt and $2.8 billion through a rights offering.
Specifically, Lyondell's confirmed reorganization plan calls for the formation of a new parent holding company called Lyondellbasell Industries N.V. and provides that administrative and priority claims, as well as the new money debtor-in-possession (DIP) financing, will receive payment in full.
DIP roll-up lenders will be issued new notes in the same principal amount they held previously, and holders of senior secured claims will receive approximately 93 percent of the Class A shares of the new holding company in exchange for their claims.
Most allowed general unsecured claims will receive a pro-rata distribution of cash and Class A shares under the terms of a settlement among Lyondellbasell and its creditor constituencies.
The reorganization plan also creates two entities: the Millennium Custodial Trust (MCT) and the Environmental Custodial Trust (ECT). The MCT is designed to deal with the company's creditors in North America. The ECT will be used by the company to make payments to the U.S. Environmental Protection Agency and various state environmental agencies in connection with any contamination issues resulting from Lyondell's operations. The ECT will be funded with $170 million in cash, the MCT with $80 million in cash.
[Editor's Note: Full coverage will be in the May issue of Mealey’s Litigation Report: Lead. In the meantime, the notice of confirmation is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #14-100512-004X. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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