Hit with an industry recession and the global financial crisis of 2008, in January 2009, LyondellBasell Industries AF SCA, one of the world’s largest internationally diversified chemical company with headquarters in the Netherlands, presented the U.S. activities and a German subsidiary under U.S. Chapter 11 bankruptcy protection. To successfully reorganize as a going concern, the company was looking at over $ 8000000000 in a super-priority “Debtor-in-Possession (DIP)” loan from a group of thirt increase … Read more »

Hit with an industry recession and the global financial crisis of 2008, in January 2009, LyondellBasell Industries AF SCA, one of the world’s largest internationally diversified chemical company with headquarters in the Netherlands, presented the U.S. activities and a German subsidiary under U.S. Chapter 11 bankruptcy protection. To successfully reorganize as a going concern, the company was looking at over $ 8000000000 in a super-priority “Debtor-in-Possession (DIP)” to increase lending by a group of thirteen financial institutions, including commercial banks, investment banks, hedge funds, and private equity funds. Representing one of the largest DIP loan in the history of this funding was critical to the survival of the company. A unique and controversial feature of the financing was a $ 3250000000 ‘roll-up’ system, under which a number of Lyondell in the insolvency allows lenders to significantly increase the priority of the debt they were already owed (so that it ranks above all were other pre-bankruptcy debts of the company owed) if the lender advanced new loans to the company to finance its restructuring. using a costly liquidation as an alternative contradicted various creditor groups to the DIP financing package, putting Lyondell’s reorganization and survival as going concern, at considerable risk.
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from
Stuart C. Gilson,
Sarah L. Abbott
Source: Harvard Business School
29 pages.
Publication Date: Dec 21, 2009. Prod #: 210001-PDF-ENG
Lyondell Chemical Company HBR case solution

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