The Appellate Division, First Department, has dismissed a lawsuit brought against Bank of New York Mellon by a dozen noteholders, including hedge funds Arrowgrass Master Fund and Caspian Capital Partners, alleging that BNY Mellon was negligent in signing off on Basell AF SCA’s disastrous leveraged buyout of Lyondell Chemical Co., costing Basell noteholders almost $1 billion.
BNY Mellon is the indenture trustee for 10-year notes Basell issued to investors in 2005. To buy Lyondell in 2007, Basell borrowed almost $20 billion from banks, increasing its debt load 10 fold. Lyondell filed for bankruptcy 13 months later. Stuck in line behind senior creditors, holders of the Basell notes complained they were able to claw back only a small part of their alleged $1 billion in losses.
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