Solutia set to come out of bankruptcy with reorganization plan
Officials from St. Louis-based Solutia Inc. announced a reorganization plan that will position the company to emerge from Chapter 11 bankruptcy, according to a May 16 company release.
"We … have filed a plan that positions Solutia to emerge from Chapter 11 with an improved cost structure, strengthened balance sheet, and greatly reduced risk profile," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia, in the release. "We will do so while providing significant recoveries for our creditors, ensuring all environmental remediation commitments will be met, securing and providing significant funding for retiree welfare benefits, and preserving our pension plan."
Under the reorganization plan, Solutia will be relieved of legacy liabilities from when the company broke off of Pharmacia, formerly Monsanto Co. of St. Louis, in 1997.
Glynn Young, director of environmental communications for Monsanto, says the company has worked with Solutia for almost three years on a plan. “From the beginning [Monsanto] has had three objectives in this whole matter: first, to see a strong Solutia come out of bankruptcy; second, to protect interest of own shareholders—we’ve made a considerable financial contribution to this; and third, to ensure that employees be treated fairly,” Young says. “The latest plan meets all three objectives.”
According to the release, those legacy liabilities that Solutia will let go of include retiree and disability benefits for individuals who retired or became disabled before the spin-off, and environmental remediation costs and toxic tort litigation costs caused by activities of the chemical business of Monsanto before the spin-off.
Solutia also outlined ways to reimburse creditors in the plan.
Officials will bring the reorganization plan before a judge July 10. If approved, the plan will be brought to a confirmation hearing Sept. 17, and the company would come out of bankruptcy by the end of September, says Daniel Jenkins, director of public relations for Solutia.
“We have significant positive momentum in the reorganization case,” Jenkins says. “There may always be matters that we’ll need to address. We believe we’re on track with this timeline … for emergence from bankruptcy in late September.”
Young says Monsonto is confident about Solutia’s new plan and hopeful it will gain approval in court. “It’s a fair plan, it’s a good plan and we think it will work,” he says.
Although Solutia has been in bankruptcy for more than three years, Jenkins says the company continued to make business investments, and customers likely did not feel any effects from Chapter 11.
“Since we’ve been in Chapter 11, we have not let the bankruptcy define who we are,” Jenkins says. “Customers have seen that.”
The company has made several major investments in its Saflex business segment, including the purchase of a plant in Mexico from a joint venture partner, the construction of a new facility in China and the start of a Saflex production line in the company’s plant in Ghent, Belgium, Jenkins says.
To read the full Solutia release outlining the reorganization plan, click here.