## Facts

- Lyondell Chemical Company and affiliates filed Chapter 11 cases in the Bankruptcy Court for the Southern District of New York.
- The debtors’ non-debtor foreign parent, LyondellBasell Industries AF S.C.A. (LBIAF), had issued substantial debt, including “2015 Notes,” and was in payment and covenant default.
- Two creditor groups posed threatened enforcement activity against LBIAF:
  - Creditors of the debtors whose claims were supported by LBIAF guarantees, who could seek to enforce the guarantees and pursue remedies against LBIAF.
  - Noteholders of LBIAF’s 2015 Notes, who could accelerate and enforce the notes and commence foreign insolvency proceedings against LBIAF.
- The debtors asserted that creditor-initiated foreign insolvency proceedings against LBIAF could lead to LBIAF’s liquidation, trigger additional insolvency filings for European affiliates, disrupt integrated European operations, and cause a default under the debtors’ DIP financing facility.
- The debtors filed an adversary proceeding and sought preliminary injunctions under 11 U.S.C. § 105(a) to restrain actions against LBIAF, requesting relief extending through plan confirmation.

## Issues

1. Whether the bankruptcy court could enjoin creditors from pursuing remedies, including foreign insolvency proceedings, against the debtors’ non-debtor parent under § 105(a) and related jurisdictional doctrines to protect the reorganization.
2. Whether the requested injunction’s breadth and duration (through confirmation) were equitable and consistent with creditor rights and public interest considerations.

## Decision

- The court granted preliminary injunctive relief in part, finding it had power to restrain creditor actions against a non-debtor when necessary to protect the Chapter 11 cases.
- The court found a credible risk of irreparable harm to the debtors if creditors commenced foreign insolvency proceedings against LBIAF, including disruption of European operations and a potential DIP default.
- The court denied the debtors’ request for an injunction lasting until confirmation as overly broad and raising significant public interest and creditor-rights concerns.
- The court issued injunctions for 60 days only, subject to carveouts and conditions, to provide short-term protection while the debtors pursued stabilizing steps, including the possibility of coordinated voluntary insolvency proceedings.

## Legal Principles

- A bankruptcy court may, in limited circumstances, enjoin actions against non-debtors under 11 U.S.C. § 105(a) when those actions threaten the debtor’s estate or prospects for reorganization and fall within the court’s related-to jurisdiction.
- Preliminary injunctions require showing (1) likelihood of success or serious questions going to the merits, (2) irreparable harm, (3) a balance of hardships favoring relief, and (4) consistency with the public interest.
- Non-debtor injunctions must be narrowly tailored; broad, long-duration restraints on creditors’ contractual and statutory remedies may be improper where they prejudice certain creditors and undermine the commercial value of guarantees.
- Where cross-border enforcement threatens cascading insolvency events that could destabilize a U.S. reorganization, temporary and conditioned relief may be warranted to prevent immediate disruption.

## Conclusion

The court recognized its authority to protect a Chapter 11 reorganization by temporarily restraining creditor actions against a non-debtor parent, but limited the injunction to 60 days with conditions, rejecting an open-ended bar through plan confirmation as an excessive interference with creditor rights and public interest in enforceable guarantees.


Lyondell Chem. Co. v. CenterPoint Energy Gas Servs. Inc. (In re Lyondell Chem. Co.), 402 B.R. 571 (Bankr. S.D.N.Y. 2009)