St. Louis—At press time, Floor Covering News has learned that Solutia and 14 of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11. Solutia’s affiliates outside the U.S. were not included in the filing. The filing was done in the U.S. Bankruptcy Court for the Southern District of New York. John Hunter, Solutia’s chairman, president and CEO, said the company’s worldwide operations will continue without interruption and that the supplier “has taken steps to ensure continued supply of goods and services to our customers.”

One of the steps taken was to secure a $500 million debtor-in-possession (DIP) financing, of which $350 million will replace Solutia’s current senior credit facility. Solutia expects the court to approve the initial first-day orders. If so, the company expects that vendors will be paid in full for any goods furnished and services provided after the filing, and that it will be able to continue to pay its 6,700 employees without disruption and in the same manner as before.

Solutia said it filed for reorganization to obtain relief from “the negative impact on the company caused by legacy liabilities, which include litigation and settlement costs, environmental remediation and retiree healthcare obligations Solutia was required to assume when it was spun-off from the former Monsanto Co., which is now known as Pharmacia, a wholly-owned subsidiary of Pfizer. “These legal liabilities have been an obstacle to Solutia’s financial stability and success,” it continued. “Under the bankruptcy code, these liabilities will be discharged as pre-petition liabilities pursuant to a plan of reorganization.” Hunter noted the company has been spending approximately $100 million each year to service these liabilities and that has forced Solutia to cut operating costs.

“We have made every effort to come to an out-of-court resolution with Monsanto, however, these negotiations have not been successful. “This filing is a turning point for Solutia,” he continued, “as it allows us to take control of our future. The protections afforded by Chapter 11 allow us to restore our focus on operations, improve our balance sheet and realize the full value of our businesses. It will also allow us to be better positioned to continue to provide our customers with he high quality products and exceptions services they have grown to expect from Solutia.” Solutia has set up a toll-free re-organization information line, 800/ 298-2303, for anyone wanting additional information.