Prepares to Emerge From Bankruptcy
Solutia Inc. in St. Louis announced yesterday that it has secured
the support of all of the major constituents in its Chapter 11 cases
for a consensual plan of reorganization.
The company originally filed its plan of reorganization and disclosure
statement in early 2006. The reorganization was undertaken to provide
the company with relief from the legacy liabilities it was required
to assume when it spun off from Pharmacia (formerly known as Monsanto)
in 1997. These legacy liabilities include retiree medical, life
insurance and disability benefits for individuals who retired or
became disabled prior to the Solutia spinoff. Also included are
environmental remediation costs related to activities of the chemicals
business of Pharmacia that occurred prior to the spinoff and toxic
tort litigation costs relating to chemical exposure associated with
the activities of Pharmacia that occurred prior to the spinoff.
"I am extremely pleased to announce today that we have reached
a comprehensive settlement with all of the major constituents in
our bankruptcy case that will form the basis for a revised consensual
plan of reorganization that will be filed within the next few days,"
says Jeffry N. Quinn, chairperson, president and chief executive
officer of Solutia. "The revised plan will position Solutia to emerge
from bankruptcy by the end of this year as a financially healthy
organization well-positioned to create significant value for its
According to information from the company, the revised plan will
provide for $250 million of new investment in the reorganized business
through a backstopped rights offering to certain creditors, as well
as a reallocation of the legacy liabilities that Solutia assumed
when it was spun off. It also will provide for a resolution of all
the litigation between the settling parties.
Under the revised plan, the reorganized company's board of directors
will be comprised of nine members, including: Quinn; J. Patrick
Mulcahy, a current director of Solutia; one director designated
by each of Monsanto, the general unsecured creditors and the noteholders;
and four directors designated by a five-person search committee
consisting of Quinn, two representatives from the noteholders and
one representative each from the general unsecured creditors and
the ad hoc trade creditors. Solutia has engaged the services of
Spencer Stuart, a global search firm, to begin the process of helping
identify and recommend highly qualified board candidates.
Solutia will update its disclosure statement and plan of reorganization
to reflect the terms of the settlement, and will soon file these
documents with the U.S. Bankruptcy Court for the Southern District
of New York. An October 10, 2007, court date has been set seeking
approval of the disclosure statement. Once approved, the disclosure
statement will be sent to Solutia's creditors and equity interest
holders for voting purposes. Following the voting process, the court
will hold a hearing to approve or "confirm" the plan.
HERE to read the full announcement from Solutia.
HERE to read Solutia's proposal to emerge from bankruptcy.
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