Chemtura files plan of reorganization, related support agreement

By Jennifer Lanning Drey

Portland, Ore., June 17 - Chemtura Corp. filed its plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan is supported by Chemtura's official committee of unsecured creditors and the ad hoc committee of bondholders. Chemtura also filed a related plan support agreement on Thursday.

The company said it remains on track to emerge from bankruptcy in the coming months.

Additionally, Chemtura said it will continue to work with its official committee of equity security holders to address any concerns they may have about the plan.

"The filing of our plan is a significant milestone in the Chapter 11 process, demonstrating Chemtura's progress toward emerging as a stronger, leaner global enterprise," Craig A. Rogerson, Chemtura's president and chief executive officer, said in the release.

The plan of reorganization proposes to make distributions to most creditors using a combination of common shares in the new Chemtura and cash.

According to the disclosure statement, the plan is premised on an estimated $2.05 billion enterprise value of the new Chemtura and the reorganized debtors.

Under the plan support agreement, Chemtura has entered into a settlement with the creditors committee and ad hoc bondholders committee, under which distributions to holders of general unsecured claims against Chemtura, holders of 2016 notes claims and holders of 2026 notes claims will be subject to a "shortfall adjustment."

The shortfall adjustment reduces the distribution to classes in the order of: first, distributions to the holders of the 2026 notes; then distributions to holders of the 2016 notes; then on a pro rata basis post-bankruptcy interest payments for general unsecured claims against Chemtura and the 2026 notes claims; and, lastly, on a pro rata basis payments payable on account of the general unsecured claims against Chemtura and the 2026 notes claims.

Creditor treatment

Creditor treatment under the plan includes:

• Holders of pre-bankruptcy secured lender claims will receive a full cash recovery, including interest at the waiver rate;

• Holders of lien claims will receive, at the option of the applicable debtor a full cash recovery, other agreed treatment or reinstatement of the lien;

• Holders of general unsecured claims and holders of 2026 notes claims will receive their share of cash and new common stock available in the unsecured distribution pool after payment in full of claims in classes 4, 5, 6 and 7 for each of the subsidiary debtors, plus interest, or will otherwise be left unimpaired.

The cash and new stock payment will be equal to the amount of the holder's claim less the applicable shortfall adjustment, if any.

To the extent that there is insufficient value available in the unsecured distribution pool to repay all general unsecured and 2026 noteholder claims for Chemtura in full, holders will receive their share, in accordance with the shortfall adjustment, of any excess cash and new common stock held in the disputed claims reserve following liquidation and payment of all disputed claims;

• Holders of general unsecured claims against subsidiary debtors will be paid from the cash and new common stock available in the unsecured distribution pool in the full amount of the claim, plus interest, or otherwise be left unimpaired;

• Holders of pre-bankruptcy unsecured lender claims will be paid from the cash and new common stock available in the unsecured distribution pool in the full amount of the claim, plus interest;

• Holders of 2016 notes claims be paid from the cash and new common stock available in the unsecured distribution pool in the full amount of the claim, plus interest, less the applicable shortfall adjustment, if any;

• Holders of 2009 notes claims for Chemtura and GLCC will be paid from the cash and new common stock available in the unsecured distribution pool in the full amount of the claim, plus post-bankruptcy interest;

• Interests in Chemtura will be canceled.

If holders of interests in Chemtura vote in favor of the plan, they will receive their share of 5% of new common stock, plus the right to participate in a rights offering for $100 million of new common stock.

If they vote against the plan, holders of interests in Chemtura will receive their share of available value after all unsecured claims have been paid; and

• Holders of interests in subsidiary debtors will remain outstanding, be canceled or transferred under the plan.

Chemtura is a Middlebury, Conn.-based manufacturer and seller of specialty chemicals and polymer products that filed for bankruptcy on March 18, 2009. Its Chapter 11 case number is 09-11233.

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