Plan of Reorganization Questions and Answers
1. What is included in the Plan of Reorganization and Disclosure Statement?
The Plan of Reorganization designates the classes of creditors and defines how those creditors will be treated or how their claims will be resolved. It also provides a summary of how the new company and its legal structure will be organized.
The Disclosure Statement summarizes the plan and the Chapter 11 case, and describes the structure of the post-Chapter 11 enterprise.
2. How much money will the Plan give to creditors?
The final amounts or recovery percentages that will be allocated to various creditors have not yet been determined.
3. What are the creditor classes and how are they determined?
The Bankruptcy Code dictates the order of payment of creditor claims and not all claims are equal. Generally, similar claims are grouped into classes and claims within a class receive equal treatment.
4. Is this the final Plan of Reorganization?
We have the opportunity to amend the plan as necessary and appropriate.
General Questions and Answers
1. When did the filing occur? Where was the Chapter 11 petition filed?
The initial filings occurred Jan. 6 in the United States Bankruptcy Court for the Southern District of New York in Manhattan. We added to the filings on April 24 and May 8, respectively, to extend protection to our parent company, its general partner and 13 additional U.S. subsidiaries.
2. Which entities have filed for Chapter 11 protection?
Certain U.S. subsidiaries and a German holding company were included in the initial filings. Our parent company and its general partner, both Luxembourg holding companies, were added to the filings on April 24. Another 13 non-operating U.S. subsidiaries were added to the filings on May 8. No LyondellBasell manufacturing operation located outside of the United States has applied for or become involved in insolvency or bankruptcy proceedings in its respective home country.
3. What is Chapter 11?
Chapter 11 is a legal mechanism for court-supervised reorganization or restructuring of a company's obligations. Chapter 11 provides companies the time and resources to restructure their debts while continuing day-to-day operations.
4. What happens during Chapter 11?
The Chapter 11 filing triggers an "automatic stay" that prevents anyone from collecting debts owed by the company prior to the filing of the Chapter 11 petition, such as payments to creditors and bondholders.
Chapter 11 permits and encourages daily operations to continue as usual or as close usual as possible. While business continues, management works with the company’s creditors on finalizing a plan to restructure the company’s debt obligations. The restructuring plan, called a Plan of Reorganization, was filed on Sept. 11, 2009. When the creditors approve and the Bankruptcy Court accepts the Plan, it is said to be "confirmed" and at that time LyondellBasell emerges from Chapter 11 with restructured financing arrangements.
5. What precipitated the filing?
During the last two quarters of 2008, we saw a dramatic softening in demand for our products and unprecedented volatility in raw materials costs. December was particularly difficult, as many of our customers postponed orders to reduce their inventories. Though we anticipate this situation to be short-term and customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term.