In re CHEMTURA CORPORATION .
| Decision Date | 21 October 2010 |
| Docket Number | No. 09-11233 (REG).,09-11233 (REG). |
| Citation | 439 B.R. 561 |
| Parties | In re CHEMTURA CORPORATION, et al., Debtors. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
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Kirkland & Ellis LLP, by M. Natasha Labovitz, Esq. (argued), Craig A. Bruens, Esq., Richard M. Cieri, Esq., New York, NY, and by David J. Zott, Esq. (argued), Nader R. Boulos, Esq. (argued), Micah E. Marcus, Esq., Benjamin T. Kurtz, Esq., Chicago, IL, for the Debtors and Debtors-in-Possession.
Duane Morris LLP, by Gerard S. Catalanello, Esq., New York, NY, and by Lawrence J. Kotler, Esq., Philadelphia, PA, Conflicts Counsel for the Debtors.
Akin, Gump, Strauss, Hauser & Feld LLP, by David M. Zensky, Esq. (argued), Abid Qureshi, Esq. (argued), Daniel H. Golden, Esq., Philip C. Dublin, Esq. (argued), Meredith A. Lahaie, Esq., Jason Goldsmith, Esq., New York, NY, for the Official Committee of Unsecured Creditors.
Jones Day, by Richard L. Wynne, Esq. (argued), Steven C. Bennett, Esq. (argued), Lance E. Miller, Esq., New York, NY, and by Erin N. Brady, Esq., Los Angeles, CA, for the Ad Hoc Committee of Bondholders.
Skadden, Arps, Slate, Meagher & Flom LLP, by Jay M. Goffman, Esq. (argued), George A. Zimmerman, Esq. (argued), Michael H. Gruenglas, Esq., New York, NY, and by Thomas J. Allingham, Esq. (argued), Wilmington, DE, for the Official Committee of Equity Security Holders.
Covington & Burling, LLP, by Michael St. Patrick Baxter, Esq. (argued), Washington, D.C., for Fiduciary Counselors.
Schulte, Roth, & Zabel LLP, by Lawrence Gelber, Esq. (argued), New York, NY, for Interlachen Investcorp.
In this contested matter in the chapter 11 cases of specialty chemicals company Chemtura Corporation (“Chemtura”) and its affiliates (collectively, the “Debtors”), the Debtors seek confirmation of their chapter 11 plan (the “Plan”). Confirmation is supported by the Official Committee of Unsecured Creditors (the “Creditors' Committee”) and an ad hoc committee of Chemtura bondholders (the “Bondholders Committee,” 2 and together with the Debtors and the Creditors' Committee, the “Plan Supporters”). But confirmation is opposed by the Official Committee of Equity Security Holders (“the Equity Committee”), and two other entities that are equity holders or act on equity holders' behalf.
The Equity Committee expresses several objections to confirmation. But the most serious of them is that the Plan-which as described below, effects its distributions to bondholders and most other creditors by means of a combination of cash and stock-undervalues the Debtors, and that a global settlement of several constituencies' entitlements (the “Settlement”), upon which the Plan is based, does likewise. While the Plan proposes a distribution to equity, the Equity Committee contends that the Plan doesn't deliver enough-and, as relevant to the Code's requirements for confirmation, that each of the Settlement and the Plan provide for payment to creditors more than in full, violating section 1129(b)'s “fair and equitable” requirement. 3 After an evidentiary hearing focusing nearly entirely on the disputed issues of valuation, I find that the Debtors' total enterprise value (“TEV”) is no higher than the valuation upon which the Settlement was based. Under those circumstances, I find that the creditors in this case will not be overpaid, or, more to the point, will not be paid more than in full.
As I ultimately reject most of the remaining Equity Committee contentions as well, 4 the Plan will be confirmed. The Plan Supporters may, if they wish, give me more extensive Findings of Fact and Conclusions of Law that also cover matters that were not in controversy. My Findings of Fact and Conclusions of Law on the basic background and disputed matters follow.
On March 18, 2009 (the “Filing Date”), Chemtura, a publicly-traded company, and 27 of its affiliates filed chapter 11 petitions in this Court. The Debtors produce specialty chemicals, polymer products, crop protection chemicals, and pool and spa chemicals. They have operations in the U.S. and Canada and hold direct and indirect interests in more than 140 nondebtor affiliates world-wide.
The Debtors' specialty chemical products are sold to industrial manufacturing customers for use as additives, ingredients, or intermediates; the company's crop protection products are sold globally through distributors and dealers to growers of produce; and the company's pool and spa chemicals are sold to consumers through local dealers, large retailers, and mass merchants.
On the filing date, the Debtors had funded debt facilities with a face amount of approximately $1.37 billion, including:
(a) $370 million outstanding under 7% unsecured notes due 2009 (the “2009 Notes”);
(b) $500 million outstanding under 6.875% unsecured notes due 2016 (the “2016 Notes”);
(c) $150 million outstanding under 6.875% unsecured debentures due 2026 (the “2026 Notes”); and
(d) a $350 million secured and unsecured revolving credit and letter of credit facility with a maturity date of 2010.
In addition to their funded debt and trade debt, the Debtors also had other liabilities that they'd need to address. When the chapter 11 cases were filed, the Debtors were paying for remediation activities, engaged in litigation and administrative proceedings, and defending investigations for potential environmental liabilities at nearly 200 sites in the United States. They also faced potential fines from the U.S. EPA, 6 putative class action lawsuits, and 15 other lawsuits, all arising from a 2004 fire at their warehouse in Conyers, Georgia.
In addition, 23 lawsuits were pending against the Debtors based upon...
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Appendix E Judicial Decisions Cited in the Text
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