A federal judge has granted Solutia Inc. a three month extension to its exclusive period for filing a reorganization plan to emerge from Chapter 11 bankruptcy.
Calling the extension “necessary and ap…
A federal judge has granted Solutia Inc. a three month extension to its exclusive period for filing a reorganization plan to emerge from Chapter 11 bankruptcy. Calling the extension “necessary and appropriate to carry out the provisions of the bankruptcy code”, U.S. Bankruptcy Judge Prudence Carter Beatty of New York gave the St. Louis-based chemical company an additional 90 days on 13 April 2004 to file its bankruptcy plan. The extension moves the deadline to 14 July 2004. When it filed for Chapter 11 federal bankruptcy protection in December 2003, Solutia had 120 days by law to file a reorganisation plan demonstrating to lenders how it intended to return to profitability. During the “exclusive period”, which would have ended in mid April 2004 but for the 90 day extension, outsiders are prevented from presenting rival plans. Beatty“s ruling also gave Solutia until 12 September 2004 to solicit creditors“ votes to approve whatever plan emerges. Solutia spokesman Glenn Ruskin said 15 April 2004 that extensions, sometimes multiple ones, were common in complex bankruptcy matters and Solutia would not rule out seeking additional extensions. Solutia and 14 of its U.S. subsidiaries sought Chapter 11 bankruptcy protection after struggling under the burden of financial obligations assigned to the company when it was demerged by Monsanto Co. as a separate company in 1997. Solutia, which has said its worldwide operations would continue without interruption, expected that matters would not improve until before spring 2004, citing volatility in energy costs, low consumer confidence and sluggish demand. In the months preceding the bankruptcy, which was announced 17 December 2003, Solutia warned that seeking Chapter 11 protection was a possibility if it failed to reduce debt, find cash for its pension fund and address legacy liabilities costing the company about USD 100 million a year. After its 1997 demerger from the former Monsanto, Solutia was burdened with retiree benefits, environmental and litigation costs accumulated by Monsanto and Pharmacia over a century of manufacturing. While calling the bankruptcy court an appropriate forum to resolve the liability issues, Monsanto has said it would not take on any obligations that are not its legal responsibility during the process, barring a court order. Solutia“s shares have been delisted on the New York Stock Exchange since the company“s bankruptcy filing, when the company“s shares traded at USD 2.54. Solutia makes films for laminated safety glass and aftermarket, nylon products, water-treatment chemicals, heat-transfer fluids and aviation hydraulic fluid.