Chemtura Corp (fka CHMT)

[Garymc]

Here is the article:

Chemtura Creditors Want to Disband Equity Committee

The creditors’ committee for Chemtura Corp., a specialty chemical manufacturer, said they will file a motion to disband the official shareholders’ committee that was formed in December. To read Bloomberg coverage of the hearing, click here.

The U.S. Trustee, not the bankruptcy judge, decides in the first instance whether to appoint additional committees. If anyone believes the U.S. Trustee made a mistake in appointing a committee or by not forming one, the dispute goes to the judge for resolution.

Chemtura said in an earlier court filing that it’s working on a reorganization plan with the creditors’ committee to include “a substantial debt-to-equity conversion.”

The creditors’ committee is suing secured lenders, contending security interests given within three months of bankruptcy on inventory and other assets were preferences that can be set aside. The committee also believes that $6 million cash also should be returned as a preference. In addition, the committee argues that the banks’ collateral only covers a $46.1 million loan, not loans totaling $139.2 million.

The Chapter 11 petition in March by Middlebury, Connecticut-based Chemtura listed assets of $3.06 billion against debt of $2.6 billion, including $1.02 billion owed on three issues of notes and debentures. Sales in 2008 were $3.5 billion. The subsidiaries outside of the U.S. didn’t file for bankruptcy.

The case is Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District New York (Manhattan).