Lyondell Chemical Company Harvard Case Solution & Analysis

Strike with a business downturn and the international monetary catastrophe of 2008, in January 2009 LyondellBasell Industries AF S.C.A., one of the world's biggest globally diversified chemical companies and headquartered in The Netherlands, set its U.S. businesses and a German subsidiary company under U.S. Chapter 11 bankruptcy protection. To successfully reorganize as a going concern, the firm sought to raise over $8 billion in a super-priority "Debtor in Possession (DIP)" loan from a group of thirteen financial institutions, together with commercial banks, investment banks, hedge funds, and private equity funds. Signifying one of the DIP loans that were greatest in history, this funding was considered essential to the survival of the company's.

One exceptional and contentious feature of the funding was a $3.25 billion 'Roll Up" facility, under which a number of Lyondell's pre-bankruptcy lenders were permitted to drastically elevate the priority of debts they were previously owed (so that they ranked ahead of all other pre-bankruptcy debts owed by the business), provided the lenders advanced new loans to the business to help fund its restructuring. With a high-priced liquidation as the option, various lender groups objected to the DIP financing package, setting survival as a going concern, and Lyondell's reorganization, at considerable danger.

PUBLICATION DATE: December 21, 2009 PRODUCT #: 210001-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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