Understanding U.S. Chapter 11
- Chapter 11 is much different from insolvency laws in Europe and elsewhere. It is a legal process by which U.S. companies can address issues relating to their finances and operations while they remain in control of their business and continue their daily operations -- manufacturing, sales, purchasing, etc.
- Chapter 11 does not mean liquidation of the company or that the company is going out of business. It is a restructuring process so that a company can resolve its financial and/or operational problems.
- In the United States, companies may seek protection under Chapter 11 for a number of reasons, including when a company’s cost structure, financial obligations or other contractual obligations stand in the way of achieving profitability. U.S. companies file Chapter 11 because often it is the most efficient and orderly way to address those obligations and restore profitability.
- In the vast majority of Chapter 11 cases, the company’s management continues in its role, making virtually all decisions regarding the day-to-day operations of the company.
- One of our primary goals is to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term through the Chapter 11 process.
- 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. Three holding companies in Europe, two incorporated in Luxembourg and one in Germany, are part of the Chapter 11 process. These holding companies do not manufacture or sell products and have no employees.
- Under U.S. law, companies operating in Chapter 11 cannot pay most U.S. debts that were incurred prior to the date they filed. But they MUST pay debts incurred after that date. LyondellBasell’s subsidiaries that are not debtors can pay all obligations regardless of whether they are from prior to or after the Chapter 11 filing date.