Lyondell Chemical Co asked a bankruptcy court on Thursday to approve a proposed settlement among warring creditors and said its secured lenders committed to support its plan of reorganization.
Under the previously announced proposal, secured lenders would pay $300 million to unsecured creditors, who brought a $22 billion lawsuit against the banks and advisers that put together Lyondell's leveraged buyout in 2007.
The proposal also establishes a fund that can be used to pursue claims against any secured lenders that did not participate in the settlement.
The company also said on Thursday secured lenders were committed to supporting its plan to emerge from bankruptcy.
We confirm through these support agreements that virtually every in-the-money constituent will support the fundamental structure of the plan converting the secured debt to equity, said Lyondell spokesman David Harpole.
But Thursday's request for the court to approve the proposed settlement did little to soften unsecured creditors' opposition.
The settlement is an abomination and we plan to oppose it vigorously, said Ed Weisfelner, a lawyer with Brown Rudnick, which represents unsecured creditors.
The chemical company also filed a request with the bankruptcy court in Manhattan for approval of a previously announced plan to sell $2.8 billion in stock in the reorganized company.
The stock is being offered to secured lenders who will end up owning the reorganized company and the sale is being backstopped by investment firms Apollo Management
Lyondell Chemical said in a statement that the equity offering did not prevent it from considering other proposals to acquire the company upon its emergence from Chapter 11 bankruptcy.
Unsecured creditors asked the bankruptcy court this week to allow a court-appointed examiner to ensure that potential bidders such as India's Reliance Industries
Reliance Industries has offered up to $12 billion to acquire Lyondell, according to sources.
Lyondell's unsecured creditors said in court papers they believe Reliance's offer is superior to the one proposed by Access, Ares and Apollo.
Lyondell said its plan remains the best option.
We believe this plan we have filed is in the best interests of the estate and the parties in this case, said Harpole.
Lyondell is a U.S. unit of LyondellBasell
LyondellBasell, a Luxembourg-based holding company, is owned by investor Len Blavatnik through New York-based Access Industries. Lyondell took on billions of dollars of debt when Access Industries led a 2007 buyout of the petrochemicals company.
(Additional reporting by Emily Chasan in New York and Santosh Nadgir in Bangalore; Editing by Maureen Bavdek and Tim Dobbyn)