Judge Dismisses LyondellBasell Creditors Clawback Lawsuit
September 05 2017 - 8:14PM
Dow Jones News
By Patrick Fitzgerald
A bankruptcy judge in New York Tuesday tossed a lawsuit filed by
creditors of LyondellBasell Industries AF to claw back more than
$5.9 billion the chemical company's shareholders received from a
failed 2007 leveraged buyout.
Judge Martin Glenn of the U.S. Bankruptcy Court in New York in a
brief, three-page order dismissed with prejudice a lawsuit brought
by a trustee on behalf of creditors of LyondellBasell's
bankruptcy.
The creditors were seeking to claw back the billions in cash
from hundreds of former shareholders -- pension and mutual funds,
Wall Street banks, hedge funds and retail investors -- of Lyondell
Chemical Co. The creditors had also sued billionaire deal maker
Leonard Blavatnik over the 2007 merger of Lyondell Chemical and
Basell AF that created what was then one of the largest chemical
companies in the world.
Mr. Blavatnik's Basell paid $48 a share for Lyondell, what the
creditors called a "blowout price" in court filings, which allowed
the Houston-based chemical company's shareholders to collect
billions from the merger.
Representatives for the trustee and the shareholders weren't
immediately available for comment.
The boom-era deal loaded the company up with more than $20
billion in debt just before global commodity markets tumbled amid
the global financial crisis. A little more than a year after the
merger, LyondellBasell filed for bankruptcy.
Unhappy creditors sued to claw back the cash from shareholders,
arguing the merger amounted to what was a so-called fraudulent
transfer that left Lyondell insolvent. Mr. Blavatnik denied that he
thought the deal would fail and blamed the global recession for the
company's financial troubles.
In April, Judge Glenn ruled in a separate-but-related lawsuit
involving Mr. Blavatnik that the trustee had failed to prove that
the merger left Lyondell insolvent, or unable to pay its debts.
"That [Lyondell] ultimately failed in a colossal manner just one
year after the merger does not necessitate a finding that, under
the circumstances, [Lyondell] was insolvent at the close of the
merger, or thereafter," the judge wrote in his April decision. "A
number of intervening events ravaged [Lyondell], including the
tragic collapse of a large crane at the Houston refinery, two
hurricanes, and of course, the Great Recession."
LyondellBasell emerged from bankruptcy in 2010 after eliminating
about $5 billion from its debt load with Mr. Blavatnik's holding
company, Access Industries, as a significant backer.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
(END) Dow Jones Newswires
September 05, 2017 19:59 ET (23:59 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
LyondellBasell Industrie... (NYSE:LYB)
Historical Stock Chart
From Mar 2024 to Apr 2024
LyondellBasell Industrie... (NYSE:LYB)
Historical Stock Chart
From Apr 2023 to Apr 2024