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In Re: Lyondell Chemical Company, et al v. Leonard Blavatnik

March 29, 2012

IN RE: LYONDELL CHEMICAL COMPANY, ET AL., DEBTORS,
EDWARD S. WEISFELNER,
PLAINTIFF,
v.
LEONARD BLAVATNIK, ET AL.,
DEFENDANTS. EDWARD S. WEISFELNER,
PLAINTIFF,
v.
NAC INVESTMENTS LLC, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge:

OPINION & ORDER

Defendants in the above-captioned cases move for withdrawal of the reference to the Bankruptcy Court pursuant to 28 U.S.C. § 157(d), Bankruptcy Rule 5011, and Stern v. Marshall, 131 S. Ct. 2594 (2011) ("Stern").*fn1 For the reasons discussed below, the motions to withdraw the reference are denied.

BACKGROUND

Lyondell Chemical Company ("Lyondell") was North America's third largest independent, publicly-traded chemical company. Basell AF S.C.A. ("Basell") was a Luxembourg entity. On December 20, 2007, Lyondell was acquired by and merged with Basell to create LyondellBasell Industries AF S.C.A. ("LBI"), the third largest chemical company in the world. On January 6, 2009, Lyondell and certain affiliates filed for relief under Chapter 11 of the Bankruptcy Code. LBI filed for bankruptcy on April 24.

The Bankruptcy Court granted the Official Committee of Unsecured Creditors (the "Committee") standing to pursue claims arising out of the merger of Lyondell and Basell (the "Merger") on July 21, 2009. This adversary proceeding commenced the following day, with a complaint filed on behalf of the Debtors' estates.

In light of the complexity of the litigation, the Bankruptcy Court divided the case into phases. The first phase ("Phase 1") consisted of certain claims against financing party defendants ("FPDs") that needed to be tried prior to LBI's emergence from bankruptcy. Trial in Phase 1 was to take place in early December 2009.

On December 4, 2009, shortly before the scheduled start of the trial, the Debtors advised the Bankruptcy Court of a proposed settlement by the Debtors and the FPDs. Following a February 16, 2010 agreement among the parties on modifications to the settlement, the Bankruptcy Court approved a revised settlement on March 11, 2010 and confirmed a plan of reorganization (the "Plan") on April 23, 2010. The Plan became effective on April 30, 2010, resulting in LBI's emergence from bankruptcy.

Pursuant to the Plan, the LB Litigation Trust was established in order to pursue estate claims that had not been settled or otherwise disposed of pursuant to the revised settlement of March 11, 2010 and the Plan. Edward Weisfelner was appointed as Trustee of the Litigation Trust (the "Trustee") and was substituted as the plaintiff in the first of these actions.

The Trustee filed an amended complaint on July 23, 2010 against individuals and corporate entities involved in the merger of Lyondell and Basell and the subsequent collapse of LBI. The amended complaint included twenty-one counts under the Bankruptcy Code, state law, Delaware law, and Luxembourg law containing the following claims:

Count 1: A constructive fraudulent transfer claim under the bankruptcy code and state law against Nell Limited, AI Chemical, and Leonard Blavatnik;

Count 2: An intentional fraudulent transfer claim under the bankruptcy code and state law against Nell Limited, AI Chemical, and Leonard Blavatnik;

Count 3: A constructive fraudulent transfer claim under the bankruptcy code and state law against the Lyondell Directors*fn2 and the Lyondell Officers;*fn3

Count 4: An intentional fraudulent transfer claim under the bankruptcy code and state law against the Lyondell Directors and the Lyondell Officers;

Count 5: A breach of fiduciary duty claim under Delaware law against the Lyondell Directors;

Count 6: A mismanagement claim under Luxembourg law against Leonard Blavatnik;

Count 7: A tort claim under Luxembourg law against Len Blavatnik, Phil Kassin, the Estate of Richard Floor, and Alan Bigman;

Count 8: A breach of fiduciary duty claim under Delaware law against the Lyondell Subsidiary Directors;*fn4

Count 9: An avoidable preference claim under the bankruptcy code and state law against Access Industries;

Count 10: An equitable subordination claim under the bankruptcy code against AI International;

Count 11: A fraudulent transfer claim under the bankruptcy code and state law against Nell Limited and Perella Weinberg;

Count 12: A breach of contract claim under state law against Access Industries;

Count 13: An illegal dividends and redemption claim under Delaware law against the Lyondell Directors;

Count 14: An unlawful distribution and extra-contractual tort claim under Luxembourg law against Leonard Blavatnik, BI S.a.r.l., Alan Bigman, Alex Blavatnik, Peter Thoren, and the Estate of Richard Floor;

Count 15: A claim for declaratory judgment for recharacterization of a revolving credit facility provided for the benefit of LBI under applicable federal or state law against Access Industries, Alan Bigman, Edward Dineen, and Morris Gelb;

Count 16: An illegal dividends and redemption claim under Delaware law against Alan Bigman, Edward Dineen, and Morris Gelb;

Count 17: A constructive fraudulent transfer claim under the bankruptcy code and state law against Access Industries;

Count 18: An aiding and abetting breach of fiduciary duty claim under Luxembourg law against Nell Limited, Access Industries, Inc., ...


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