Solutia noteholders object to exclusivity extension

By Caroline Salls

Pittsburgh, Nov. 10 - Solutia Inc.'s informal noteholders committee objected to the company's request for an extension to its exclusive plan filing and solicitation period, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the objection, three years have passed and no viable reorganization plan has been filed or is in prospect.

In addition, the committee said the company has "misused the privilege of the exclusive period to make wrong choices at critical junctures in these cases, and consequently have retarded, rather than advanced, a successful conclusion."

The noteholders said the company still holds "to the same failed strategy developed in 2003" to remove the noteholders' bargained-for equal and ratable lien, and thereby free up equity value, "and then use the unlawful gains to reward Monsanto extravagantly for taking back just a portion of the legacy liabilities improperly put upon the [company] in the first place."

The committee said the company made the wrong choice in 2003, in the mistaken belief no court would ever stop them, and, even though their strategy is no longer viable, Solutia has refused to admit its mistake and choose a new course.

The objection said the costs to the estate of the company's "failed leadership include millions upon millions of dollars in professional fees," and the company's recent public filings reveal $52 million in professional fees paid in the year ended Sept. 30.

"Meanwhile, the noteholders' committee, whose professionals have not been paid by the estate, are the only parties pushing for serious and conclusive plan negotiations," the objection said.

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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