Cadwalader Completes Historic Global Reorganization

Apr 30, 2010

LyondellBasell Emerges from Bankruptcy

Cadwalader, Wickersham & Taft LLP successfully completed the global reorganization of chemical company giant LyondellBasell as the company emerges today from its rehabilitative stay in Chapter 11.

“LyondellBasell’s plan of reorganization, which became effective today, is the capstone of an historic and extremely successful global reorganization,” stated George Davis, lead counsel for Lyondell and Partner in Cadwalader’s Financial Restructuring practice. “When Lyondell retained Cadwalader 15 months ago, the credit markets were frozen and the ability to obtain third-party DIP financing was virtually non-existent. Add to that a significant debt burden, billions of dollars of potential liabilities and an international corporate structure whose foreign subsidiary secured obligors could not be fully protected by filing Chapter 11 in U.S.Bankruptcy Court, and it is easy to see that the scope of the engagement was significant,” he said. “I am proud to be among so many outstanding professionals who met every challenge this complex case presented in a time frame and with results that permit our client to move forward with confidence and certainty.”

Jim Gallogly, Chief Executive Officer of LyondellBasell, stated: “The past 18 months have been extraordinarily challenging for our company. George and his team recognized the complexity of the business environment and traversed very difficult legal terrain. Their outstanding work has led to a consensual resolution deemed fair to all stakeholders. It was an extraordinary accomplishment achieved in a very short period of time. We are grateful for Cadwalader’s hard work as we exit bankruptcy well-positioned for the future.”

Under the plan, LyondellBasell has emerged with only $7.2 billion in consolidated debt ($5.2 billion of net consolidated debt), over $3 billion of liquidity and $10 billion of stockholder equity value (one of the highest in Chapter 11 history).

Among other noteworthy accomplishments in the case were:

  • securing a $8 billion DIP facility, then the largest DIP facility in chapter 11 history, at a time when the credit markets were frozen, which was made possible though a unique dollar-for-dollar roll-up feature of prepetition secured term debt;
  • maintaining adequate funding for the Debtors’ European non-debtor affiliates throughout the Chapter 11 cases, through secured funding under the DIP facility and the filing of a single German affiliate in Chapter 11;
  • protecting the European non-debtor affiliates from the exercise of creditor remedies during the Chapter 11 cases through forbearance agreements, where attainable, and injunctive relief from the Court, where not;
  • prosecuting and successfully settling the largest fraudulent conveyance case against secured lenders in Chapter 11 history;
  • consensually resolving all major inter-creditor disputes over valuation, claims allowance and subordination among creditors holding over $24 billion of debt under seven different credit facilities; and
  • closing a $2.8 billion rights offering for post-emergence new equity capital; and managing an unprecedented closing into escrow in advance of confirmation of $3.25 billion of the $5 billion of committed new exit financing facilities.

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