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Chemtura Files Reorganization Plan

Bankruptcy Exit: Shareholders object and say they want a larger stake

by Marc S. Reisch
June 23, 2010 | A version of this story appeared in Volume 88, Issue 26

Rogerson
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Credit: Marc Reisch/C&EN
Credit: Marc Reisch/C&EN

Chemtura has filed a plan of reorganization with the U.S. Bankruptcy Court that is supported by bondholders and other creditors. However, shareholders say they are developing an alternate plan that would give them a greater stake in the reorganized company when it finally emerges from bankruptcy.

The Chemtura plan demonstrates the firm's progress to becoming "a stronger, leaner global enterprise," says CEO Craig A. Rogerson, calling it "a testament to the outstanding progress we have made in restructuring our finances and operations."

Chemtura's plan would settle all creditors' claims in full and give existing shareholders 5% of the firm's new shares. If the judge supervising the case approves the plan at a hearing scheduled for July 21, those with a stake in the firm will then have a chance to accept or reject it.

The firm filed for bankruptcy reorganization in March 2009 during the low point of the global credit crisis. At the time, it was unable to meet a deadline to pay a $374 million note. Although Chemtura had hoped to emerge from bankruptcy in March of this year (C&EN, Sept. 14, 2009, page 22), negotiations with stakeholders have delayed that optimistic plan.

Shareholders say their plan will be ready in a few weeks. The alternate plan could set off a tussle between Chemtura and creditors on the one hand and shareholders on the other. At a court hearing in New York City on June 17, a lawyer representing shareholders told the judge that the group's plan would also pay claims in full but would give shareholders a larger stake than they would get in Chemtura's plan.

However, a Chemtura spokesman argues that the plan the company submitted to the court is good for all parties. It offers a "recovery" for existing shareholders that is "much better than most expected about a month ago," he says.

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