Volume 42, Issue 6 - June 2007
|Legislation & Legal
Solutia Reaches Settlement Agreement With FMC
St. Louis-based Solutia Inc., reached a settlement in its case against FMC Corp. The suit, filed by Solutia in October 2003, arose from a dispute over the companies’ former joint venture known as Astaris. Under the terms of the settlement, FMC will pay Solutia $22.5 million in cash, and both parties will release each other from all claims related to this case. The settlement is subject to authorization by the bankruptcy court overseeing Solutia’s reorganization.
The suit began when Solutia filed an action against FMC over the failure of purified phosphoric acid technology provided by FMC to Astaris.
In addition, Solutia unfurled a reorganization plan to pull itself out of bankruptcy by the third quarter of 2007. If accepted by Bankruptcy Court of the Southern District of New York, the plan would shift responsibility of certain ‘legacy liabilities’ to its former parent company, Monsanto, and provides for an infusion of $250 million in new investment.
In exchange for 20 percent of the stock in a reorganized Solutia, Monsanto will take responsibility for all current and future tort litigation costs arising from its chemical business prior to the separation from Monsanto. Monsanto would also assume responsibility for environmental remediation and cleanup of all sites under Solutia’s purview at the time of the spinoff, which were never owned or operated by Solutia. In total, the ‘legacy liabilities’ cost Solutia an estimated $100 million annually, according to vice president of communications, Paul Berra.