Chemtura Corp., the bankrupt plastic- additives maker, updated its reorganization proposal with a plan to put a Canadian unit into bankruptcy.
Chemtura Canada will join 26 other affiliates that are already in bankruptcy, allowing Chemtura to resolve certain liabilities related to a chemical it made that gave microwave popcorn a butter flavor, the company said. Adding the Canadian unit was the biggest change to the plan, company spokesman John Gustavsen said in an interview.
The reorganization proposal has the “potential to satisfy all creditors’ claims in full, as well as offering value to equity holders,” the company said in a statement today.
The company, based in Middlebury, Connecticut, has a preliminary agreement with some governmental agencies fighting for about $2 billion in cleanup costs, company lawyer Brian Stansbury told U.S. District Judge Richard Berman in Manhattan last month.
Chemtura, which filed for bankruptcy protection in March 2009, sued the U.S. and several states, saying it should be able to cancel some environmental claims because of its bankruptcy. The U.S. won its bid to have the case moved to district court from bankruptcy court.
As many as 197 sites may be involved, the U.S. said in court papers. The Environmental Protection Agency is seeking about $2 billion in cleanup costs for at least 19 sites where it claims Chemtura is partly responsible. The largest estimated cost, $1 billion, is for a cleanup of the Gowanus Canal in Brooklyn, New York.
Also today, the official equity committee filed court papers objecting to an agreement that binds the creditors’ committee and a group of bondholders to support the reorganization proposal.
Chemtura is a successor to Crompton & Knowles Corp., a chemical maker since 1954. The company said it was burdened with “legacy liabilities” from mergers including the 1996 purchase of Uniroyal Chemical Co., a 1999 merger with Witco and the 2005 acquisition of Great Lakes Chemical Corp.
The bankruptcy case is In re Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The district-court case is Chemtura Corp. v. U.S., 10-cv-00503, U.S. District Court, Southern District of New York (Manhattan).
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