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Bankruptcy Keyed to Levitan, 3rd Ed.
In re Chemtura Corp.
Citation:
439 B.R. 561 (2010)Facts
Chemtura Corporation and 27 affiliates filed for Chapter 11 protection in March 2009, facing approximately $1.37 billion in funded debt, environmental liabilities at nearly 200 sites, potential fines from the EPA, numerous lawsuits related to a 2004 warehouse fire, 23 lawsuits alleging respiratory illness from exposure to Diacetyl (a butter flavoring ingredient), and significant pension obligations. During bankruptcy, the Debtors improved their financial condition by settling and reducing claims by more than $9.4 billion. Management formulated a Long Range Plan projecting increasing earnings through 2014. The Debtors proposed a plan based on a settlement with creditors that valued the company at $2.05 billion, providing for payment to creditors with a combination of cash and new common stock. The plan included settlements of make-whole and no-call claims by bondholders for approximately 40% of their asserted value. The Official Committee of Equity Security Holders objected, arguing that the company was worth between $2.3 and $2.6 billion and that the settlement overpaid creditors. The court conducted a four-day evidentiary hearing focused primarily on valuation, with experts presenting competing analyses using discounted cash flow, comparable companies, and precedent transactions methodologies.
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