Fox Business: Patrick Fitzgerald, September 5, 2017
Judge Dismisses LyondellBasell Creditors Clawback Lawsuit
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.