Solutia has sued three of the banks involved in its Chapter 11 refinancing over delays in the restructuring. As previously noted, last month Solutia announced that its emergence from Chapter 11 bankruptcy will be delayed from the previously announced effective date of January 28, 2008 due to problems in obtaining the necessary exit financing.
Solutia Inc. (NYSE: SOA) today filed a complaint in the U.S. Bankruptcy Court for the Southern District of New York against the three banks that had executed a firm commitment to fund a $2 billion exit financing package for Solutia, but to date have refused to meet this commitment. These banks are Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. Solutia is seeking a court order requiring the banks to meet their commitment and fund Solutia’s exit from bankruptcy. The complaint also asserts that the banks should be stopped from invoking the clause they claim relieves them of their obligation due to their improper conduct and misrepresentations to the company, and further claims that the banks fraudulently induced Solutia to enter into the initial engagement by promising that the financing was firmly committed. Solutia and the banks have agreed that Solutia’s claim to require immediate funding of the $2 billion package should be heard by the Court on an expedited basis, with the trial to conclude by the end of February – prior to the expiration of the banks’ commitment.
Solutia’s press release on the suit is here.