At the time of the last update, Oct. ’04, the bankruptcy judge had ruled in favor of the retirees’ motion which maintained that Solutia could not make the medical benefit changes it proposed for 2005 without complying with Section 1114 of the Bankruptcy Code. The court order subsequently issued said that Solutia shall restore and maintain the benefits as of January 1, 2004 unless and until Solutia seeks relief per Section 1114. It did allow Solutia to change third party administrators or providers of the benefits. As a result the retirees saw no changes in premiums or benefits for 2005 as of the present time. However, Solutia has appealed the court order in the U.S. District Court, Southern District of New York. Retirees could be affected if Solutia prevails in this appeal to the extent allowed by the Pensacola Settlement and the resulting 2002 Plan.
Lawyers for the Retirees Bankruptcy Committee have filed a counter motion to dismiss the appeal. At this time briefs have been filed with the District Court by both parties but no hearing date has been set. In addition, the Committee of Unsecured Creditors has filed to join Solutia in its appeal. Our lawyers have filed a motion in opposition requesting that the Creditors committee be excluded because they failed to file their motion within the time allowed.
The motions, briefs and hearings needed to thrash this out is going to take some time, perhaps months. There is no way to predict the length of time or the outcome of this appeal at this time.
One other item of note is the Status Report of the Committee of Equity Security Holders which was filed with the Bankruptcy Court in March. The committee performed an extensive investigation and analysis regarding the circumstances and structure of the 1997 Solutia spin-off. As a result, and for the reasons stated in the report, the committee requests the Bankruptcy Court to declare: the assumption of legacy liabilities by Solutia in the spin-off to be void and unenforceable, that Solutia has a right of contribution against Pharmacia and the new Monsanto relating to environmental contamination caused by same and that Solutia is entitled to an implied indemnity from Pharmacia and new Monsanto for any claims made relating to legacy liabilities, including environmental contamination and lawsuits. You can read the full text of this report on the Spencer Fane website .
Solutia has received an extension of time from the Bankruptcy Court for submitting its reorganization plan. The new deadline is July 11, 2005
Additional information will be provided as it becomes available.