LyondellBasell Industries (“LBI”), the world’s third-largest independent chemical company, emerged from Chapter 11 on April 30, 2010, fifteen months after commencing proceedings on January 6, 2009 before the Honorable Robert E. Gerber in the U.S. Bankruptcy Court for the Southern District of New York. Simpson Thacher advised UBS AG, Stamford Branch, UBS Securities LLC, and UBS Loan Finance LLC throughout LBI’s bankruptcy on various aspects of the precedent-setting proceedings, including advising UBS in its role as administrative agent for $6.5 billion of LBI’s $8 billion debtor-in-possession (“DIP”) facilities, defending UBS against allegations of fraudulent conveyance in litigation brought by the committee representing LBI’s unsecured creditors, and working with UBS in its efforts to support and participate in LBI’s exit financing.
LBI and ninety-three affiliates filed for bankruptcy relief on an emergency basis after suffering a sudden sharp decline in liquidity at the end of 2008. UBS AG, Stamford Branch was enlisted by other lenders and LBI to serve as administrative agent of the DIP term loan facility, which was approved by the Bankruptcy Court on a final basis in March 2009 after three days of contested evidentiary hearings. The DIP term loan facility, together with the $1.54 billion DIP asset-backed revolving facility also obtained by LBI, remains the largest non-governmental debtor-in-possession financing in history. The DIP term facility consisted of $3.25 billion of new money term loans and a novel $3.25 billion “roll-up” of only a portion of LBI’s existing pre-petition senior secured loans.
In July 2009, the Official Committee of Unsecured Creditors commenced a fraudulent conveyance adversary proceeding against a variety of parties for claims arising from the December 2007 acquisition of Lyondell by Basell Industries. Defendants included UBS Securities LLC, which acted as one of five lead arrangers in connection with the approximately $20 billion in merger financing, including approximately $4 billion provided by certain of its affiliates. According to the Debtors and Creditors’ Committee, the fraudulent conveyance case was the largest in Chapter 11 history. After more than four months of “rocket docket” litigation, the Debtors reached a settlement on the eve of trial directly with certain financing party defendants (including UBS) over the objection of the Creditors’ Committee. A second wave of extensive discovery and litigation by the Creditors’ Committee challenging the propriety of the settlement ensued. In February 2010, a global settlement was reached with virtually all parties, including the Creditors’ Committee, paving the way for the Debtors to emerge from Chapter 11. The settlement was approved by the Court on March 11, 2010.
Under LBI’s plan of reorganization, secured lenders exchanged their debt for new equity. The DIP new money loans were paid back in full in cash, and DIP roll-up loans were exchanged for new third lien notes. The company funded its emergence from Chapter 11 through a $2.8 billion rights offering and $5 billion in exit financing.
The Simpson Thacher team included Linda Martin, Natalie Drucker, Daniel Stujenske, Mike Castiglione, Minta Nester, Gillian Maupin and Elizabeth Gillen (Litigation), Kathrine McLendon, Anne Knight and Jason Friedman (Bankruptcy), Stephan Feder, Bill Sheehan, David Eisenberg, Walt Looney, Ursula Mackey and Benjamin Wells (Corporate), Steven Todrys, Jason Vollbracht and Daniel Foster (Tax), Mardi Merjian (Real Estate), Lori Lesser and Marcela Robledo (IP), Adeeb Fadil and Tim Mulvihill (Environmental), Greg Grogan (Executive Compensation & Employee Benefits) and paralegals Doug Henderson, Christina Mauricio and Andrew Laird.