Feb 9 (Reuters) - Lyondell Chemical Co has asked a U.S. bankruptcy judge to stop certain note holders, to whom it owes $615 million, from taking action against the company, saying they may try to force its European operations into bankruptcy.
In court filings late last week, Lyondell said its bankruptcy had triggered an event of default under indentured notes due in 2015.
The company claimed that certain holders of those notes who also hold credit default swaps as a hedge on the debt, have been attempting to accelerate payments on the notes to trigger a payout on the swaps.
A group of 25 percent of the note holders would be able to accelerate the payments, Lyondell said.
Lyondell said such a move could force its European units into bankruptcy or that those holders may try to begin involuntary bankruptcy proceedings against the company in Luxembourg, the Netherlands or elsewhere.
When Lyondell and 79 affiliates filed for bankruptcy in January, it triggered payments on around $479 million in contracts protecting the U.S. company's debt, according to the Depository Trust and Clearing Corp.
LyondellBasell Industries has net volumes of around $773 million in credit default swaps outstanding, which would need to be paid out if the European parent company files for bankruptcy, according to DTCC data.
Most of the company's European units, which represent about a third of LyondellBasell's overall value according to lawyers involved in the case, have not been placed into bankruptcy.
Netherlands-based Lyondell, owned by Russian-born investor Len Blavatnik through New York-based Access Industries, has even gone so far as to include a special provision in its debtor-in-possession bankruptcy financing agreement to prevent lenders from trying to put its European units into bankruptcy.
The company, the world's third-largest maker of petrochemicals products, has said its bankruptcy filing occurred as a result of a heavy debt load, volatility in oil prices and reduced demand due to the economic downturn.
A hearing on the request is scheduled for Feb. 13.
The case is In re: Lyondell Chemical Co. No 09-10023, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Santosh Nadgir in Bangalore, additional reporting by Emily Chasan and Karen Brettell in New York; Editing by Amitha Rajan) Keywords: LYONDELLCHEMICAL/ (santosh.nadgir@thomsonreuters.com; within U.S +1 646 223 8780;Outside U.S +91 080 4135 5800; Reuters messaging: santosh.nadgir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
In court filings late last week, Lyondell said its bankruptcy had triggered an event of default under indentured notes due in 2015.
The company claimed that certain holders of those notes who also hold credit default swaps as a hedge on the debt, have been attempting to accelerate payments on the notes to trigger a payout on the swaps.
A group of 25 percent of the note holders would be able to accelerate the payments, Lyondell said.
Lyondell said such a move could force its European units into bankruptcy or that those holders may try to begin involuntary bankruptcy proceedings against the company in Luxembourg, the Netherlands or elsewhere.
When Lyondell and 79 affiliates filed for bankruptcy in January, it triggered payments on around $479 million in contracts protecting the U.S. company's debt, according to the Depository Trust and Clearing Corp.
LyondellBasell Industries has net volumes of around $773 million in credit default swaps outstanding, which would need to be paid out if the European parent company files for bankruptcy, according to DTCC data.
Most of the company's European units, which represent about a third of LyondellBasell's overall value according to lawyers involved in the case, have not been placed into bankruptcy.
Netherlands-based Lyondell, owned by Russian-born investor Len Blavatnik through New York-based Access Industries, has even gone so far as to include a special provision in its debtor-in-possession bankruptcy financing agreement to prevent lenders from trying to put its European units into bankruptcy.
The company, the world's third-largest maker of petrochemicals products, has said its bankruptcy filing occurred as a result of a heavy debt load, volatility in oil prices and reduced demand due to the economic downturn.
A hearing on the request is scheduled for Feb. 13.
The case is In re: Lyondell Chemical Co. No 09-10023, U.S. Bankruptcy Court, Southern District of New York.
(Reporting by Santosh Nadgir in Bangalore, additional reporting by Emily Chasan and Karen Brettell in New York; Editing by Amitha Rajan) Keywords: LYONDELLCHEMICAL/ (santosh.nadgir@thomsonreuters.com; within U.S +1 646 223 8780;Outside U.S +91 080 4135 5800; Reuters messaging: santosh.nadgir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.