The firm was only able to pursue the move after securing the agreement of European shareholders to restructure their Euro Notes in the firm. Otherwise, the group's Belgium-based European subsidiary might have been forced to follow its parent down the Chapter 11 route.
As it stands, only the US operations of the business - including 14 subsidiaries - are affected by the petition. Solutia has also received a commitment for $500 million (€405m) in financing from existing debtors as it copes with legal and other bills of around $100 million a year that date from before it was spun out of Monsanto in 1997.
The liabilities include responsibility for lawsuit costs and Monsanto retiree healthcare expenses, and getting rid of these is the primary reason for the petition, according to Solutia's CEO John Hunter. The $500 million fundraising and current cash reserves will allow the firm to continue operating during the petition process, he noted.
"We believe that the Chapter 11 process will give us a forum to shed these burdensome liabilities and to compete on a more level playing field with others in our industry,"he said. Aside from these liabilities, the company is also suffering like others in the chemicals industry with high energy and raw materials costs and weakened demand.
Earlier this month, the company got embroiled in a lawsuit with Monsanto over who should pay a $3 million liability in two personal injury cases related to asbestos exposure.