Judge Clears Solutia's Payment of Legal Fees

New York, NY, April 18, 2008--A bankruptcy judge cleared Solutia Inc. to pay about $197 million to lawyers and other professionals despite government objections.

Bankruptcy Judge Prudence Beatty ruled Thursday that the law firms and consultants were entitled to most of what they had requested.

The U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, objected to some requests, citing exorbitant expenses and law firm Kirkland & Ellis's alleged failure to disclose a conflict of interest with Citigroup Inc.

Town and Country, Mo.-based Solutia, which filed for bankruptcy in December 2003, settled litigation in February with Citigroup Inc., Goldman Sachs Group Inc. and Deutsche Bank AG. The lenders had threatened to pull a $2 billion loan that Solutia needed to emerge from court protection.

The U.S. Trustee singled out Kirkland & Ellis's request for fees for work done from 2005 to 2008, arguing that it should have been reduced by $6 million due to a failure to disclose that because Citigroup was a client, it couldn't sue the bank in connection with Solutia's exit loan.