Solutia files for voluntary Chapter 11
During the Chapter 11 proceedings, Solutia's worldwide operations will operate without interruption. The company has taken steps to ensure continued supply of goods and services to its customers. In that regard, Solutia has received a commitment for up to $500 million in new debtor-in-possession (DIP) financing, $350 million of which will replace Solutia's current senior credit facility. Upon court approval, the DIP financing, combined with the company's cash from operations, will provide sufficient funding for operations during the Chapter 11 process. Vendors will be paid in full for all goods furnished and services provided after the filing date as required by the Bankruptcy Code. The company has requested court approval to continue to pay employees without disruption and in the same manner as before the filing, and expects the request to be granted as part of the court's "first day" orders.
The decision to file was made to obtain relief from the negative impact on the company caused by legacy liabilities, which include litigation and settlement costs, environmental remediation and Monsanto retiree healthcare obligations Solutia was required to assume when the company was spun-off from the former Monsanto Co., which is now known as Pharmacia, a wholly owned subsidiary of Pfizer. These legal liabilities have been an obstacle to Solutia's financial stability and success. Under the U.S. Bankruptcy Code, these liabilities will be discharged as pre-petition liabilities pursuant to a plan of reorganization.
Additional information on Solutia's Chapter 11 reorganization is available from the company's web site, www.solutia.com. The company has also set up a toll free Reorganization Information Line at (800) 298-2303.