Solutia noteholders object to exclusivity extension, ask court to move their plan forward

By Caroline Salls

Pittsburgh, April 30 - Solutia Inc.'s informal committee of noteholders objected to the company's motion for a 90-day extension to its exclusive periods to file a plan of reorganization and solicit votes on the plan, arguing that the company continues to favor its general unsecured creditors, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The noteholders said the company's latest exclusivity extension request cites considerable efforts made since the last exclusivity hearing in its attempt to bring stakeholders together to reach a consensus on the terms of a modified plan.

"Evidently, they want the court to believe they had something to do with the fact that Monsanto has agreed to make substantial concessions in the plan agreed to as a result of the noteholders' committee's negotiation efforts. Nothing could be further from the truth," the noteholders said in the objection.

Instead, the noteholders said Solutia has used its current exclusive period to continue its strategy of favoring the interests of general unsecured creditors over those of noteholders, and, if exclusivity is extended, the noteholders said the company will certainly do more of the same.

"As before, the debtors are so desperate to obtain an extension that they would apparently file a plan lacking Monsanto's and noteholders' support merely to obtain a meaningless solicitation period," the objection said.

The noteholders said the company's actions represent an impressible use of the exclusive periods to pressure one set of constituencies to favor another, although Solutia's principal constituencies - Monsanto and the noteholders - have agreed on terms for a plan of reorganization that provides for Monsanto and the noteholders to make major concessions in a compromise of pending litigation.

"Rather than embrace such monumental progress, [Solutia rejects] the opportunity to seek confirmation of such plan, instead continuing a strategy favoring holdouts (general unsecured creditors) whose claims are vastly exceeded by those of Monsanto and the noteholders," according to the objection.

"The debtors' destructive approach deprives them of any right to control the plan process."

Solutia, a St. Louis-based manufacturer and provider of performance films, specialty chemicals and an integrated family of nylon products, filed for bankruptcy on Dec. 17, 2003. Its Chapter 11 case number is 03-17949.

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