Solutia says Bank of NY Mellon group overstating debt claims by $40 million
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NEW YORK -- Solutia Inc. says a group of bondholders led by Bank of New York Mellon Corp. is exaggerating by more than $40 million the amount of debt the specialty-chemicals company owes it.
In documents filed with the U.S. Bankruptcy Court in Manhattan, Solutia said the bondholders were wrong in their claim that the principal value of the 11.25 percent senior secured note due in 2009 was $223 million. It said the actual number is $181.7 million, which is the amount the company received when the bonds were issued with a $41.3 million discount.
Solutia said it owed the bondholders $209 million based on the principal amount of the bond plus accrued interest of about $28.2 million. Solutia's creditors committee also has filed an objection to the bondholders' claims.
The bondholders want Solutia to pay not just the principal amount of the bonds but also accrued interest through the stated date of maturity of the bond, or equivalent damages, because Solutia accelerated repayment of the bond when it entered bankruptcy.
U.S Bankruptcy Judge Prudence Carter Beatty is scheduled to consider the dispute at an Oct. 26 hearing.
St. Louis-based Solutia was once the chemical division of Monsanto Co., but was spun off in 1997. It sought bankruptcy protection in 2003 because of personal-injury lawsuits related to its products, and because of environmental-contamination lawsuits.
Under its current plan of reorganization -- the outline of which must be approved by the bankruptcy court -- unsecured creditors are to receive about 85 cents for every dollar of the $800 million they're owed. Creditors also would get shares in the reorganized company.
First Published October 11, 2007 5:53 pm
