Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re : Chapter 11
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SOLUTIA INC., ET AL., : Case No. 03-17949 (PCB)
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Debtors. : (Jointly Administered)
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THIS ORDER APPLIES TO:
X All Debtors Axio Research Corporation
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Solutia Inc. Solutia Investments, LLC
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Solutia Business Enterprises, Inc. Beamer Road Management Company
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Solutia Systems, Inc. Monchem, Inc.
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Solutia Overseas, Inc. Solutia Inter-America, Inc.
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CPFilms Inc. Solutia International Holding, LLC
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Solutia Management Company, Inc. Solutia Taiwan, Inc.
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Monchem International, Inc. Solutia Greater China, Inc.
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ORDER TO SHOW CAUSE SCHEDULING
HEARING TO CONSIDER DEBTORS' MOTION FOR AN ORDER
PURSUANT TO SECTIONS 105(a), 362(a)(3) AND 541 OF THE BANKRUPTCY
CODE (A) LIMITING CERTAIN TRANSFERS OF EQUITY INTERESTS
IN SOLUTIA INC. AND (B) APPROVING RELATED NOTICE PROCEDURES
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Upon the Debtors' Motion for an Order Pursuant to Sections 105(a),
362(a)(3) and 541 of the Bankruptcy Code (A) Limiting Certain Transfers of
Equity Interests in Solutia Inc. and (B) Approving Related Notice Procedures
(the "Motion"); and
IT APPEARING that the Debtor requires immediate relief establishing
Notice and Hearing Procedures for trading in Solutia's Equity Interests (as
defined below) or the Options (as defined below), because such trading could
result in the irrevocable loss of the Debtors' tax net operating losses
("NOLs") and, unless immediate relief is granted, the Debtors, their
creditors and their estates are likely to suffer irreparable harm; and
IT FURTHER APPEARING from the affidavit of Richard M. Cieri,
annexed to the Motion as Exhibit D, that unrestricted trading in Solutia's
Equity Interests will result in the loss of NOLs by operation of section 382
of the Internal Revenue Code of 1986, as amended (the "IRC"), and such
trading may be imminent, making formal notice impractical under these
circumstances because any delay in the relief requested will immediately and
irreparably diminish the estates and undermine the Debtors' ability to
successfully emerge from these chapter 11 cases, it is
NOW, on the motion of Kirkland and Ellis LLP as counsel for the
Debtors, IT IS HEREBY ORDERED THAT:
1. All parties in interest show cause before this Court on the
1st of February 2006 at 2:30 p.m. Eastern Time, or as soon thereafter as counsel
can be heard (the "Hearing"), in Room 701 of the United States Bankruptcy
Court for the Southern District of New York, One Bowling Green, New York,
New York, why an order should not be entered establishing notification
procedures regarding transfers and trading of Equity Securities as set forth
in the Motion in accordance with sections 105(a) and 362 of chapter 11 of
title 11 of the United States Code, 11 U.S.C. Sections 101-1330 (the
"Bankruptcy Code").
2. Pending the Hearing, all sales or other transfers of Equity
Securities or Options, in violation of the Notice and Hearing Procedures (as
defined below), by Substantial Equityholders (as defined below) or that
result in an entity becoming a Substantial Equityholder are prohibited and
shall be void ab initio.
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3. The following notice and hearing procedures (the "Notice and
Hearing Procedures") are hereby approved, pending the Hearing:
A. NOTICE PROCEDURES FOR TRANSFERS OF EQUITY SECURITIES
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(1) Notice of Substantial Equityholder Status. Any person or
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entity (as defined for purposes of section 382 of the IRC
and the Treasury Regulations thereunder that currently
Beneficially Owns (as defined below) at least 4,700,681
shares (representing approximately 4.5% of all issued and
outstanding shares) of the of the Equity Securities (a
"Substantial Equityholder") shall file with the Court and
serve upon the Debtors' counsel a notice of such status in
the form attached as Exhibit B(1) to the Motion on or
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before the date that is thirty days after the entry of
this Order.
(a) Beneficial Ownership. For purposes of this Order,
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beneficial ownership ("Beneficial Ownership") of
an "Equity Interest" (as defined in section 101
of the Bankruptcy Code) in and of Solutia (the
"Equity Interests") or an Option (as defined
below) with respect to either (each of the
foregoing, an "Interest"), consistent with
section 382 of the IRC (including attribution
rules), includes:
(i) title ownership;
(ii) direct and indirect ownership (for
example, a holding company would be
considered to "beneficially own" all
Interests owned or acquired by its
subsidiaries);
(iii) ownership by family members;
(iv) ownership by persons acting in concert
to make a coordinated acquisition of an
Interest; and
(v) ownership of an Interest that a holder
has a right to acquire through the
ownership of an option, a contingent
purchase right, a warrant, convertible
debt or equity, a put, an Interest
subject to risk of forfeiture or a
contract to acquire an Interest,
regardless of whether such Interest or
right to acquire is contingent or
otherwise not currently exercisable
(each such right or interest to acquire,
an "Option").
(2) Acquisition of Equity Securities. Prior to effecting any
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acquisition of a Beneficial Ownership in the Equity
Securities (including the acquisition of Option to acquire
the Equity Securities) that would result in an increase in
the amount of the Equity Securities Beneficially Owned by
a Substantial Equityholder or would result in a person or
entity (as defined for purposes of section 382 of the IRC)
becoming a Substantial Equityholder (a "Proposed Equity
Acquisition Transaction"), such person, entity or
Substantial Equityholder (a "Proposed Equity Transferee")
shall file with the Court and serve on the Debtors'
counsel a Notice of Intent to Purchase, Acquire or
Otherwise Accumulate an Equity Interest (an "Equity
Acquisition Notice"), in the form attached as Exhibit B(2)
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to the Motion, specifically and in detail describing the
intended transaction acquiring the Equity Securities.
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(3) Disposition of Equity Securities. Prior to effecting any
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disposition of a Beneficial Ownership in the Equity
Securities (including the disposition of an Option to
acquire the Equity Securities) that would result in a
decrease in the amount of the Equity Securities
Beneficially Owned by a Substantial Equityholder or that
would result in a person or entity (as defined for
purposes of section 382 of the IRC) ceasing to be a
Substantial Equityholder (a "Proposed Equity Disposition
Transaction"), such person, entity or Substantial
Equityholder (a "Proposed Equity Transferor") shall file
with the Court and serve on the Debtors' counsel a Notice
of Intent to Sell, Trade or Otherwise Transfer an Equity
Interest (an "Equity Disposition Notice"), in the form
attached as Exhibit B(3) to the Motion, specifically and
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in detail describing the intended transaction disposing of
the Equity Securities.
(4) Objection Procedures. No later than the date that is
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thirty calendar days after the Debtors' actual receipt of
an Equity Acquisition Notice or an Equity Disposition
Notice, as the case may be (the "Objection Deadline"), the
Debtors may file with the Court and serve on a Proposed
Equity Transferor or a Proposed Equity Transferee, as the
case may be, an objection to any proposed transfer of the
Equity Securities described in an Equity Acquisition
Notice or an Equity Disposition Notice, as the case may
be, on the grounds that such transfer would adversely
affect the Debtors' ability to utilize their NOLs (an
"Objection").
(a) If the Debtors timely file an Objection by the
Objection Deadline, the Proposed Equity
Acquisition Transaction or Proposed Equity
Disposition Transaction, as the case may be,
shall not be effective unless approved by an
order of this Court, after notice and a hearing
and such order is not subject to appeal, stay,
modification or reconsideration.
(b) If the Debtors do not timely file an Objection by
the Objection Deadline, the Proposed Equity
Acquisition Transaction or Proposed Equity
Disposition Transaction, as the case may be, may
proceed only as specifically described in an
Equity Acquisition Notice or Equity Disposition
Notice, as the case may be.
(c) Any further transactions beyond the scope of the
Equity Acquisition Notice or Equity Disposition
Notice, as the case may be, must separately
follow the notice procedure as set forth herein.
B. OTHER NOTICE PROCEDURES
(1) Service of Procedures Notice. Following entry of this
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Order, the Debtors shall deliver a copy of the Notice of
(A) Notification procedures Applicable to Substantial
Holders of Equity Securities and (B) Notification and
Hearing Procedures for Trading in Equity Securities (the
"Notice of Notification Procedures") (a copy of which is
attached as Exhibit C to the Motion) to the entities
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listed below. The Notice of Notification Procedures shall
inform all
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recipients thereof how to obtain copies of these Notice
Procedures and the relevant notices described herein.
(a) the United States Trustee for the Southern
District of New York,
(b) counsel to the official committee of unsecured
creditors,
(c) counsel to the official committee of retirees,
(d) counsel to the official committee of equity
security holders,
(e) counsel to the agents for the Debtors'
post-petition secured bank lenders,
(f) the indenture trustee for each of the public debt
securities issued or guaranteed by the Debtors,
(g) the labor organizations that are party to
collective bargaining agreements with the
Debtors,
(h) counsel to any ad hoc committees for the public
debt securities issued or guaranteed by the
Debtors,
(i) Pharmacia Corporation,
(j) Monsanto Company,
(k) the Securities and Exchange Commission,
(l) the Internal Revenue Service,
(m) those parties who have formally appeared and
requested service in these cases pursuant to
Bankruptcy Rule 2002;
(n) the transfer agents for Solutia's Equity
Securities; and
(o) any shareholder holding 4.5% or more of Solutia's
issued and outstanding Equity Securities.
(2) Upon receipt of the Notice of Notification Procedures, any
transfer agent(s) for any Equity Securities shall, at
least once every three months during the pendency of these
chapter 11 cases, deliver the Notice of Notification
Procedures to all holders of the Equity Securities
registered with such transfer agent(s).
(a) Any such registered holder shall, in turn,
deliver a copy of the Notice of Notification
Procedures to any holder for whose account such
registered holder holds such Equity Securities
and so on down the chain of ownership.
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(b) Any person or entity in their individual capacity
(a "Prospective Seller") and any broker or agent
acting on behalf of a Prospective Seller, who
contemplates selling Beneficial Ownership in
4,700,681 shares, or more, of Equity Securities
to another person or entity (a "Prospective
Purchaser") must provide a copy of the Notice of
Notification Procedures to each Prospective
Purchaser or any broker or agent acting on behalf
of a Prospective Purchaser.
(3) The Debtors shall publish the Notice of Notification
Procedures in the domestic editions of the Wall Street
Journal and the New York Times.
4. The requirements set forth in these Notice and Hearing
Procedures are in addition to the requirements of applicable securities,
corporate and other laws and do not excuse compliance therewith.
5. Any responses or objections to the relief requested herein
must be in writing, shall conform to the Federal Rules of Bankruptcy
Procedure and the Local Rules of the Bankruptcy Court, and shall be filed
with the Bankruptcy Court electronically by registered users of the
Bankruptcy Court's case filing system (the User's Manual for the Electronic
Case Filing System can be found at www.nysb.uscourts.gov, the official
website for the Bankruptcy Court) and, by all other parties in interest,
on a 3.5 inch disk, preferably in Portable Document Format (PDF),
Wordperfect or any other Windows-based word processing format (in either
case, with a hard-copy delivered directly to Chambers), and shall be served
upon (i) Kirkland & Ellis LLP, Citigroup Center, 153 East 53rd Street,
New York, New York 10022 (Attn: Michael J. Frishberg, Esq.), (ii) the Office
of the United States Trustee for the Southern District of New York, 33
Whitehall Street, 21st floor, New York, New York 10004 (Attn: Greg Zipes,
Esq.), (iii) Skadden, Arps, Slate, Meagher & Flom LLP, 333 West Wacker Drive,
Chicago, Illinois 60606 (Attn: Timothy R. Pohl, Esq. and Samuel S. Ory, Esq.),
counsel for the agents for the Debtors' postpetition secured lenders, (iv)
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York 10036 (Attn: Bennett S. Silverberg, Esq.), counsel for the agents
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for the Debtors' postpetition secured lenders, (v) Akin, Gump, Strauss,
Hauer & Feld, LLP, 590 Madison Avenue, New York, New York 10022 (Attn:
Daniel H. Golden, Esq.), counsel for the official committee of unsecured
creditors, (vi) Weil Gotshal & Manges LLP, 767 Fifth Avenue, New York, New
York 10153 (Attn: John Rapisardi, Esq.), counsel for the prepetition ad hoc
committee of Solutia senior secured noteholders, (vii) Spencer Fane Britt
Browne LLP, 1 North Brentwood Boulevard, Tenth Floor, St. Louis, Missouri
63105 (Attn: Nicholas A. Franke, Esq.), counsel to the official committee of
retirees, (viii) Haskell Slaughter Young & Rediker LLC, 1400 Park Place
Tower, 2001 Park Place North, Birmingham, Alabama 35203 (Attn: R. Scott
Williams, Esq.), counsel to the official committee of retirees, (ix)
Pillsbury Winthrop Shaw Pittman LLP, 650 Town Center Drive, Seventh Floor,
Costa Mesa, California 92626 (Attn: Craig A. Barbarosh, Esq.), counsel to
the official committee of equity security holders, and (x) all persons or
entities that have served and filed notices of appearance in these chapter
11 cases pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure,
so as to be received no later than JANUARY 5, 2006 AT 5:00 P.M.
6. The Court shall retain jurisdiction with respect to any
matters, claims, rights or disputes arising from or related to the
implementation of this Order.
Dated: , 2005
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New York, New York
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PRUDENCE CARTER BEATTY
UNITED STATES BANKRUPTCY JUDGE
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