Solutia noteholders object to revised disclosure statement

By Jennifer Lanning Drey

Portland, Ore., Aug. 14 - An ad hoc committee of Solutia Inc. noteholders objected to the company's revised fourth-amended disclosure statement for its plan of reorganization, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

In the objection, the committee said the disclosure statement contains an estimate of a $15.9 million proposed allowed administrative claim for former parent Monsanto Co. but that the estimate is only as accrued through May 31. The noteholders committee wants the company to disclose the amount, or a range for the amount, through the effective date.

Additionally, the committee believes the plan should disclose what would happen if Solutia litigated against Monsanto, instead of settled, and won.

The committee also said the disclosure statement fails to mention a number of the plan provisions, including that holders of noteholder claims would not commence until all general unsecured claims are resolved.

Furthermore, the committee said it continues to object to the proposed procedures governing the rights offering, under which participants would be required to post cash of up to $250 million as a condition to participating, even though Solutia will obtain a backstop for the rights offering.

Finally, the committee told the court any order approving the disclosure statement should clearly state that the confirmation hearing would only proceed if the hearing on the settlement with Monsanto has concluded and a ruling has been issued approving the Monsanto settlement and the retiree settlement.

The ad hoc committee said it has provided Solutia with specific proposed language for a consensual disclosure statement, but the company has not attempted to address its concerns.

As previously reported, a bankruptcy judge told Solutia on Aug. 1 that its plan needed major tweaking before it could be approved by the court.

A fifth hearing on the disclosure statement has not yet been scheduled.

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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