Monsanto retirees who were shifted to Solutia for retiree benefits after the spin-off from Monsanto Company have their benefits at risk due to Solutia’s filing for bankruptcy in December, 2003. The filing for bankruptcy was communicated to those affected retirees and beneficiaries by a letter from John Hunter which stated that the filing had no immediate impact on the benefits. But, the letter further stated that Solutia planned to ask the Bankruptcy Court to relieve Solutia from any obligation to pay these benefits.
The retiree benefits at risk are specifically medical benefits, life insurance and disability benefits. Pensions are not included in any bankruptcy considerations at this time.
The Bankruptcy Code requires the debtor, Solutia, to negotiate any proposed change in retiree benefits with a committee of retirees if such a change is necessary to permit reorganization of the debtor and assure that all creditors, the debtor and all affected parties are treated fairly and equitably. Solutia has made known the change it proposes. It is in the process of asking the Court to determine that it can terminate those benefits mentioned above for those retirees (and beneficiaries) of the original Monsanto Company who had been shifted to Solutia. You may see these referred to as the “pre-spin” retirees; other retirees are referred to as “post-spin” retirees, whose benefits also may be at risk.
Several pre-spin retirees contacted law firms regarding the situation and, as a result, a proposed retiree committee has been formed with the following members:
Ken Kettler -- Chesterfield, MO (Chairman)
Jack Treece -- Molino, FL
Larry Baird -- Gulf Breeze, FL
Don Meade -- Alvin, TX
Phil Hamer -- Wilbraham, MA
Don Margenau -- Chesterfield, MO
Ed McCormick -- Collinsville, IL
It is the intent of this proposed committee to resist any change and work to protect the existing benefits to the greatest extent possible. To this end, the proposed committee has engaged two law firms who expressed an interest as a result of retiree inquiries, Spencer, Fane, Britt and Browne of St. Louis, MO and Haskell, Slaughter, Young and Rediker of Birmingham, AL. Spencer, Fane got involved because two members of the firm have a parent or parents who are pre-spin retirees; Haskell, Slaughter was contacted by interested pre-spin retirees.
Application has been made to the Court for:
- Recognition of the committee
- Approval of the two law firms as legal counsel for the committee
- Payment of the fees and expenses incurred with payment to come from post-petition financing of the bankruptcy.
Written approval has not been received from the Court as of this writing.
In a related filing Solutia has asked the Court for a declaratory judgment that Pharmacia, as the successor to the original Monsanto Company, is responsible for providing the benefits (medical, life insurance and disability). The committee is determining what position to take regarding this filing.
It should be noted that Solutia can make no change in these benefits unless and until a court order permits it.
Additional information will be communicated as it becomes available.