: : : : : : : PLEASE TAKE NOTICE that a hearing on the Debtors Motion for an Order Approving

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1 DUANE MORRIS LLP Hearing Date: August 17, 2009 at 10:00 a.m 1540 Broadway Objection Deadline: August 14, 2009 at 4:00 p.m. New York, New York (212) (212) (facsimile) Gerard S. Catalanello, Esq. James J. Vincequerra, Esq. Conflicts and Other Counsel to the Debtors and Debtors-in-Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: CHEMTURA CORPORATION, et al., 1 Debtors. : : : : : : : Case No (REG) Chapter 11 (Jointly Administered) NOTICE OF DEBTORS MOTION FOR AN ORDER APPROVING (I) A SETTLEMENT BETWEEN CHEMTURA CORPORATION AND SOLVAY S.A., SOLVAY CHEMICALS, INC. AND SOLVAY AMERICA PURSUANT TO FED. R. BANKR. P INCLUDING DEBTORS ASSUMPTION OF A SUPPLY AGREEMENT (AS AMENDED) WITH SOLVAY, AND (II) PAYMENT OF FEES AND COSTS TO COUNSEL FOR DEBTORS PURSUANT TO CONTINGENT FEE AGREEMENT PREVIOUSLY APPROVED BY THE COURT PLEASE TAKE NOTICE that a hearing on the Debtors Motion for an Order Approving (I) a Settlement Between Chemtura Corporation and Solvay S.A., Solvay Chemicals, Inc. and 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayeridentification number, are: Chemtura Corporation (3153); A&M Cleaning Products, LLC (4712); Aqua Clear Industries, LLC (1394); ASCK, Inc. (4489); ASEPSIS, Inc. (6270); BioLab Company Store, LLC (0131); BioLab Franchise Company, LLC (6709); Bio-Lab, Inc. (8754); BioLab Textile Additives, LLC (4348); CNK Chemical Realty Corporation (5340); Crompton Colors Incorporated (3341); Crompton Holding Corporation (3342); Crompton Monochem, Inc. (3574); GLCC Laurel, LLC (5687); Great Lakes Chemical Corporation (5035); Great Lakes Chemical Global, Inc. (4486); GT Seed Treatment, Inc. (5292); HomeCare Labs, Inc. (5038); ISCI, Inc. (7696); Kem Manufacturing Corporation (0603); Laurel Industries Holdings, Inc. (3635); Monochem, Inc. (5612); Naugatuck Treatment Company (2035); Recreational Water Products, Inc. (8754); Uniroyal Chemical Company Limited (Delaware) (9910); Weber City Road LLC (4381); and WRL of Indiana, Inc. (9136) DM1\

2 Solvay America Pursuant to Fed. R. Bankr. P Including Debtors Assumption of a Supply Agreement (as Amended) with Solvay, and (II) Payment of Fees and Costs to Counsel for Debtors Pursuant to a Contingent Fee Arrangement Previously Approved by the Court (the Motion ) will be held before the Honorable Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ), Alexander Hamilton Custom House, One Bowling Green, Room 621, New York, New York on August 17, 2009 at 10:00 a.m. (ET). PLEASE TAKE FURTHER NOTICE that any responses or objections to the Motion 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 the official website for the Bankruptcy Court) and, by all other parties in interest, on a 3.5 inch disk, in text-searchable 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: (a) the Debtors and their counsel, (b) the Office of the United States Trustee for the Southern District of New York, (c) counsel to the Official Committee of Unsecured Creditors; (d) counsel to Solvay; and (e) all those persons and entities that have formally requested notice by filing a written request for notice, pursuant to Bankruptcy Rule 2002 and the Local Bankruptcy Rules, with the Clerk of the Bankruptcy Court and serving such notice on the Debtors and their counsel, so as to be actually received no later than August 14, 2009 at 4:00 p.m. (ET). Only those responses that are timely filed, served and received will be considered at 2

3 the Hearing. Failure to file a timely objection may result in entry of a final order granting the Motion as requested by the Debtors. Dated: New York, New York July 27, 2009 DUANE MORRIS LLP /s/ Gerard S. Catalanello Gerard S. Catalanello, Esq. James J. Vincequerra, Esq Broadway New York, New York (212) (212) (facsimile) gcatalanello@duanemorris.com jvincequerra@duanemorris.com Conflicts Counsel to the Debtors and Debtors-in-Possession 3

4 DUANE MORRIS LLP Hearing Date: August 17, 2009 at 10:00 a.m Broadway Objection Deadline: August 14, 2009 at 4:00 p.m. New York, New York (212) (212) (facsimile) Gerard S. Catalanello, Esq. James J. Vincequerra, Esq. Conflicts and Other Counsel to the Debtors and Debtors-in-Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: CHEMTURA CORPORATION, et al., Debtors. : : : : : : : Case No (REG) Chapter 11 (Jointly Administered) DEBTORS MOTION FOR AN ORDER APPROVING (I) A SETTLEMENT BETWEEN CHEMTURA CORPORATION AND SOLVAY S.A., SOLVAY CHEMICALS, INC. AND SOLVAY AMERICA PURSUANT TO FED. R. BANKR. P INCLUDING DEBTORS ASSUMPTION OF A SUPPLY AGREEMENT (AS AMENDED) WITH SOLVAY, AND (II) PAYMENT OF FEES AND COSTS TO COUNSEL FOR DEBTORS PURSUANT TO CONTINGENT FEE AGREEMENT PREVIOUSLY APPROVED BY THE COURT Chemtura Corporation ( Chemtura ) and certain of its subsidiaries and affiliates, as debtors and debtors-in-possession in the above-captioned Chapter 11 cases (collectively, the Debtors ) 1, as and for their motion (the Motion ) for an Order pursuant to Rule 9019 of the 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayeridentification number, are: Chemtura Corporation (3153); A&M Cleaning Products, LLC (4712); Aqua Clear Industries, LLC (1394); ASCK, Inc. (4489); ASEPSIS, Inc. (6270); BioLab Company Store, LLC (0131); BioLab Franchise Company, LLC (6709); Bio-Lab, Inc. (8754); BioLab Textile Additives, LLC (4348); CNK Chemical Realty Corporation (5340); Crompton Colors Incorporated (3341); Crompton Holding Corporation (3342); Crompton Monochem, Inc. (3574); GLCC Laurel, LLC (5687); Great Lakes Chemical Corporation (5035); Great Lakes Chemical Global, Inc. (4486); GT Seed Treatment, Inc. (5292); HomeCare Labs, Inc. (5038); ISCI, Inc. (7696); Kem Manufacturing Corporation (0603); Laurel Industries Holdings, Inc. (3635); Monochem, Inc. (5612); Naugatuck Treatment Company (2035); (Continued ) DM1\

5 Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) approving and authorizing Chemtura, on behalf of its divisions, subsidiaries, predecessors and assigns, to (i) enter into a settlement (the Solvay Settlement ) substantially in the form of the agreement annexed hereto as Exhibit A (the Settlement Agreement ) with Solvay S.A., Solvay Chemicals, Inc. and Solvay America, Inc. (collectively, Solvay and together with Chemtura, the Parties ), to resolve price fixing litigation between the Parties, (ii) assume a supply agreement, as amended, for purchase of hydrogen peroxide from Solvay, and (iii) pay attorneys fees and costs to Debtors counsel Duane Morris LLP ( Duane Morris ) pursuant to a contingent fee agreement previously approved by the Court, and respectfully represent as follows: RELIEF REQUESTED 1. By this Motion, Chemtura seeks three (3) forms of relief, all stemming from the negotiated resolution of the litigation between the Parties. 2. First, Chemtura seeks approval of the Solvay Settlement between Chemtura and Solvay, which resolves the pending hydrogen peroxide price fixing litigation filed by Chemtura against Solvay in the District Court for the Eastern District of Pennsylvania, Case No (the Chemtura Action ). 3. Pursuant to the Solvay Settlement, 2 subject to approval of this Court, Chemtura agrees to assume the Hydrogen Peroxide Supply Agreement (as defined below) between the Parties, and extend the term of same through July 31, 2010, and Solvay agrees to withdraw and (Continued ) Recreational Water Products, Inc. (8754); Uniroyal Chemical Company Limited (Delaware) (9910); Weber City Road LLC (4381); and WRL of Indiana, Inc. (9136) 2 The information provided herein serves only as a summary of the Solvay Settlement. If any inconsistencies exist between this Motion and the Solvay Settlement, the Solvay Settlement, a copy of which is annexed hereto as Exhibit A, controls. 2

6 waive its Reclamation Demand (as defined below) and its Section 503(b)(9) claim, and will supply Chemtura with certain amounts (6,292,000 pounds) of product at no cost. The value of the product at $0.315 per pound (the price negotiated in 2008 by Solvay and Chemtura under the Supply Agreement) is $1,981,980. In the event Chemtura does not need that much product by July 31, 2010, it can elect to receive a cash payment in lieu of up to $300,000 worth of the product. 4. In addition, pursuant to the Solvay Settlement, Solvay will refund Chemtura $542, for the invoices paid by Chemtura year to date, and will make an additional cash settlement payment to Chemtura in the amount of $475, These payments, totaling $1,018,000, are collectively referred to in the Settlement Agreement and herein as the Settlement Payments. In return for the Settlement Payments and the other consideration under and pursuant to the Settlement Agreement, Chemtura will dismiss its claims against Solvay in the Chemtura Action with prejudice and Chemtura and Solvay shall exchange mutual releases. 5. Second, Chemtura seeks this Court s approval to assume the Supply Agreement, consistent with the terms of the Solvay Settlement. 6. Third, Chemtura seeks authority to pay Duane Morris its contingent fee, approved by prior Order of this Court dated May 15, 2009, relating to the settlement of the Chemtura Action, in the amount of $599, in fees and $1, in expenses. RELEVANT BACKGROUND I. The Multidistrict Class Action: In re: Hydrogen Peroxide Antitrust Litigation 7. The Solvay Settlement involves the Chemtura Action, filed against Solvay in 2008 in connection with multidistrict litigation titled In re Hydrogen Peroxide Antitrust Litigation, MDL No (the MDL ). The MDL is pending in the United Stated District 3

7 Court for the Eastern District of Pennsylvania (the District Court ), following the Judicial Panel on Multidistrict Litigation s transfer of cases from various districts for coordinated proceedings. 8. Class plaintiffs purporting to represent a class of direct purchasers of hydrogen peroxide in the United States filed claims in the MDL against Akzo Nobel, Inc. and related entities, Arkema, Inc. and related entities, Degussa Corporation and related entities, FMC Corporation, Kemira Chemicals, Inc. and related entities, and Solvay. The direct purchaser class action alleged a conspiracy to fix prices of hydrogen peroxide in the United States in violation of Section 1 of the Sherman Act. As a direct purchaser of hydrogen peroxide from one or more of the defendants between 1994 and 2005, Chemtura was a member of the alleged plaintiff class. 9. In January 2007, the District Court certified a class of direct purchasers of hydrogen peroxide, which class included Chemtura. In December 2008, the Court of Appeals reversed the class certification. In 2007 and 2008, class plaintiffs negotiated and the District Court approved certain class settlements, including settlements with Degussa defendants (amnesty applicants in the Department of Justice investigation), Akzo Nobel defendants, Kemira defendants, and Solvay defendants. 10. Chemtura opted out of the settlement class with respect to Solvay, but remained in the settlement classes joining in settlements with the Degussa defendants, the Akzo Nobel defendants and the Kemira defendants. After opting out of the Solvay settlement class, Chemtura attempted to negotiate an individual settlement with Solvay. After unsuccessful settlement negotiations, on November 12, 2008, Chemtura filed the Chemtura Action as an individual action against Solvay. 4

8 11. The Complaint in the Chemtura Action asserted claims against Solvay, and also against the remaining defendants in the class complaint, FMC Corporation and Arkema defendants. Pursuant to a stipulation and order recently approved by this Court, Chemtura determined to remain in subsequent class settlements with FMC Corporation and Arkema defendants, and dismissed the claims against those defendants in the Chemtura Action. Thus, only claims against Solvay remain in the Chemtura Action. 12. The Chemtura Action was consolidated with the MDL. Solvay denies liability to Chemtura for the conduct alleged in the Chemtura Action and the MDL. II. The Debtors Bankruptcy Proceeding 13. On March 18, 2009 (the Petition Date ), the Debtors each filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ). The Debtors bankruptcy cases are being jointly administered pursuant to Rule 1015 of the Federal Rules of Bankruptcy Procedure. 14. The Debtors remain in possession of their assets and continue to manage their businesses as debtors in possession pursuant to Bankruptcy Code sections 1107 and The United States Trustee appointed an Official Committee of Unsecured Creditors (the Committee ) on March 26, No trustee or examiner has been appointed in these chapter 11 cases. 16. Chemtura, together with its Debtor and non-debtor subsidiaries and affiliates, is among the largest publicly-traded specialty chemical companies in the United States, dedicated to manufacturing and marketing specialty chemicals, crop protection and pool, spa and home care products. 5

9 III. The Proposed Settlement Between Chemtura and Solvay 17. On September 1, 2008, Solvay as seller and Chemtura as buyer entered into a Hydrogen Peroxide Supply Agreement (the Supply Agreement ). 18. Prior to the Petition Date, Solvay supplied Chemtura with certain amounts of hydrogen peroxide pursuant to the Supply Agreement for which Chemtura has not made payment (the Pre-Petition Delivered Product ). 19. Based upon Chemtura s non-payment for approximately $225,000 of Pre-Petition Delivered Product, Solvay has pre-petition claims against Chemtura. Solvay has served a reclamation notice pursuant to Section 546(c)(1) of the Bankruptcy Code and/or of the Uniform Commercial Code (the Reclamation Demand ) with respect to approximately $180,000 worth of hydrogen peroxide, comprising the majority of the Pre-Petition Delivered Product. Solvay forwarded its Reclamation Demand to Chemtura on March 20, Counsel for Chemtura and counsel for Solvay engaged in arm s length settlement negotiations to settle the Chemtura Action and the Reclamation Demand, which negotiations resulted in the Solvay Settlement, memorialized in the Settlement Agreement annexed hereto as Exhibit A. 21. Chemtura and Solvay have agreed to resolve the various disputes between the parties as follows: A. Waiver Of Reclamation Demand And Defaults And Assumption and Extension of Supply Agreement 22. Subject to the Court s approval of the Solvay Settlement, Solvay agrees to withdraw and waive the Reclamation Demand and its Section 503(b)(9) claim, and further agrees that any and all defaults by Chemtura under the Supply Agreement shall be deemed cured. 6

10 23. Pursuant to Section 365 of the Bankruptcy Code, Chemtura agrees to assume the Supply Agreement, subject to the approval of the Court, which approval Chemtura will seek in connection with the Court s approval of the Solvay Settlement. 24. Solvay and Chemtura agree to extend the assumed Supply Agreement through and including July 31, 2010, under the same terms and conditions, including the same pricing terms, and will execute an Amendment to Supply Agreement to memorialize the extension and agreement to maintain existing pricing. Like the Settlement Agreement, that Amendment has been executed by the Parties, but is subject to Court approval before it becomes effective. B. No-Cost Supply of Hydrogen Peroxide 25. Solvay agrees to supply at no cost to Chemtura a total of 6,292,000 pounds of hydrogen peroxide, subject to the same terms and conditions (other than payment) as the Supply Agreement, as amended. This amount shall include any hydrogen peroxide previously shipped to Chemtura by Solvay for which Chemtura has not yet rendered payment, including the Pre- Petition Delivered Product. 26. Based on most recent estimates, Chemtura anticipates that it likely will need and use all of the no-cost supply within the next six months. 27. If Chemtura s requirements for hydrogen peroxide do not reach the total amount of 6,292,000 pounds before July 31, 2010, Chemtura may elect a cash payment in lieu of product for remaining product amount not to exceed 952,381 pounds of hydrogen peroxide (up to $300,000). 28. If Solvay terminates the Supply Agreement prior to making delivery of the full 6,292,000 pounds of hydrogen peroxide (or any cash payment elected by Chemtura), Solvay shall immediately make payment to Chemtura of the cash value (valued at $0.315 per pound) of the remaining undelivered amounts. 7

11 C. Solvay Settlement Payments 29. In addition to the no-cost supply of hydrogen peroxide discussed above, Solvay has agreed to refund to Chemtura the amount of $542,241.12, representing the total year to date amount paid by Chemtura for invoices from Solvay. 30. Further, Solvay shall make an additional settlement payment to Chemtura in the amount of $475, as additional consideration for the settlement between the Parties, for total Settlement Payments amounting to $1,018,000, in addition to the no-cost supply. D. Dismissal of Claims Against Solvay 31. In exchange for the Settlement Payments, the assumption and extension of the Supply Agreement, the receipt of the no-cost supply of hydrogen peroxide, and the remaining provisions of the Solvay Settlement, Chemtura agrees to dismiss with prejudice the claims asserted against Solvay by Chemtura in the Chemtura Action. Chemtura further agrees that it will not institute any separate litigation against Solvay for matters at issue in, or that could have been brought as part of the pending litigation. E. Mutual Releases 32. Upon receipt of the Settlement Payments from Solvay, Chemtura and Solvay have agreed to mutual releases, each releasing the other Party from any and all liability for claims, demands, debts, obligations, damages, losses, or liabilities arising out of the Supply Agreement, or in any way pertaining to the purchase, sale and/or pricing of hydrogen peroxide anywhere including, but not limited to, the Pre-Petition Delivered Product, the Reclamation Demand, and any and all claims that were or could have been made in the MDL, Chemtura Action or in any other forum or proceeding, excluding obligations pursuant to the Solvay Settlement agreement, and subject to certain other qualifications and limitations as recited in the Solvay Settlement agreement. 8

12 33. Pursuant to Bankruptcy Rule 9019, the effectiveness of the Solvay Settlement is subject to the entry of an Order of this Court granting this Motion and approving the Solvay Settlement. JURISDICTION 34. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C and RELIEF REQUESTED AND BASIS THEREFOR I. Approval of Settlement and Assumption of Supply Agreement A. Legal Standards (i) Rule 9019(a) 35. Rule 9019(a) authorizes a court, after notice and a hearing, to approve a compromise or settlement of controversy. Rule 9019(a) provides, in relevant part, that [o]n motion by the [debtor-in-possession] and after notice and a hearing, the court may approve a compromise or settlement. See Fed. R. Bankr. P. 9019(a). 36. Settlements and compromises are a normal part of the process of reorganization. Protective Comm. For Indep. Stockholders of TMT Trailer Ferry, Inc. v. Andersen, 390 U.S. 414, 424 (1968). 37. Although Rule 9019(a) contains no standards for judicial approval of a settlement, case law directs a court to determine whether the settlement is fair and equitable and in the best interests of the estate. Id. at 424; In re Hydronic Enterprises, Inc., 58 B.R. 363 (Bankr. D.R.I. 1986). The settlement need not be the best that could have been achieved, but only must not fall below the lowest point in the range of reasonableness. In re Drexel Burnham Lambert Group, Inc., 134 B.R. 493, 496 (Bankr. S.D.N.Y. 1991) (internal citations omitted). 9

13 38. To approve a compromise or settlement under Rule 9019(a), a court should find that the compromise or settlement is fair and equitable, reasonable, and in the best interests of the debtors estate. See e.g., In re Ionosphere Clubs, Inc., 156 B.R. 414, 426 (S.D.N.Y. 1993), aff d 17 F.3d 600 (2d Cir. 1994). 39. In determining whether to approve a settlement, the court must make an independent determination that the settlement is fair and reasonable. Nellis v. Shugrue, 165 B.R. 115, (S.D.N.Y. 1993). The court may consider the opinions proffered by the debtor-inpossession or trustee that the settlement is fair and reasonable. Id.; see also In re Purofied Down Prods. Corp., 150 B.R. 519, 522 (S.D.N.Y. 1993). 40. Further, a court may exercise its discretion in light of the general public policy favoring settlements. In re Hibbard Brown & Co., 217 B.R. 41, 46 (Bankr. S.D.N.Y. 1999); see also Nellis, 165 B.R. at 123 ( [T]he general rule [is] that settlements are favored and, in fact, encouraged by the approval process. ). 41. In determining whether to approve a proposed settlement, a bankruptcy court need not decide the numerous issues of law and fact raised by the settlement, but rather should canvass the issues and see whether the settlement falls below the lowest point in the range of reasonableness. In re WT Grant Co., 699 F.2d 599, 608 (2d Cir. 1983) (internal citations omitted); see also Purofied Down Prods. Corp., 150 B.R. at 522 ( [T]he court need not conduct a mini-trial to determine the merits of the underlying litigation. ). 42. The reasonableness of a settlement depends upon all factors, including probability of success, the length and cost of the litigation, and the extent to which the settlement is truly the product of arms-length bargaining, and not fraud or collusion. Ionosphere, 156 B.R. at

14 (ii) Section 365(a) 43. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor in possession, subject to the court s approval, may assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C. 365(a). 44. It is well established that decisions to assume or reject executory contracts or unexpired leases are matters within the business judgment of a debtor. See In re G Survivor Corp., 171 B.R. 755, 757 (Bankr. S.D.N.Y. 1994) (noting that [i]n determining whether a debtor may be permitted to reject an executory contract, courts usually apply the business judgment test. Generally, absent a showing of bad faith, or an abuse of discretion, the debtor s business judgment will not be altered. ) (internal citations omitted). 45. The business judgment rule is satisfied where the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. In re Integrated Res., Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992), appeal dismissed, 3 F.3d 49 (2d Cir. 1993) (internal citations omitted). In fact, [w]here the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts generally will not entertain objections to the debtor s conduct. In re Johns-Manville Corp., 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986). 46. Courts in this district consistently are reluctant to interfere with corporate decision-making absent a showing of bad faith, self-interest, or gross negligence, and have upheld a debtor s business decisions as long as they are attributable to any rational business purpose. Integrated Res., 147 B.R. at

15 B. The Solvay Settlement Should Be Approved Because it is Fair, Reasonable and in the Best Interest of the Debtors and their Estates 47. Here, a review of the relevant facts demonstrates that Chemtura s entry into and performance under the Solvay Settlement, as evidenced by the Settlement Agreement, is supported by Chemtura s reasonable business judgment. The Solvay Settlement provides that Chemtura will receive: (a) a cash payment in the amount of $1,018,000, representing the cash refund of invoices paid year to date ($542,241.12) plus the additional settlement payment ($475,758.88); and (b) 6,292,000 pounds of free hydrogen peroxide (valued at $1,981,980 at the price of $0.315 negotiated at arms length by Chemtura and Solvay in 2008), including any hydrogen peroxide previously shipped by Solvay to Chemtura for which Chemtura has not yet paid (or the cash equivalent for certain amounts not utilized). 48. The total value of the proposed settlement is approximately $3 million, which represents 7.5 percent of Chemtura s purchases of hydrogen peroxide from Solvay during the class period covered by the MDL and Chemtura Action; 11 percent of Chemtura s purchases of hydrogen peroxide from Solvay during the principal period over which class plaintiffs assert that damages were incurred (1994 to 2001); and 25 percent of Chemtura s purchases of hydrogen peroxide from Solvay during the period covering Solvay s guilty plea regarding price fixing (July 1998 to Dec. 2001). 49. In light of the risks and benefits associated with the Chemtura Action and the Reclamation Demand, the Solvay Settlement is favorable to the Debtors Chapter 11 estates. The Solvay Settlement, valued at $3 million, represents an amount which is significantly more than Chemtura likely would have received from the Solvay class settlement if it had not opted out of same. 12

16 50. Class plaintiffs counsel have requested and have been allowed fees of 30 percent of recoveries on behalf of the class in the MDL, plus expenses. Pursuant to the contingent fee agreement between Debtors and Duane Morris previously approved by the Bankruptcy Court, Duane Morris is entitled to fees amounting to 20 percent of the value of the settlement and Debtors are responsible for costs, which at this stage are minimal, but which could amount to well in excess of $1 million in the event the matter proceeded to trial. After deducting the contingent fee and minimal cost incurred, the Solvay Settlement would bring Debtors net value of approximately $2.4 million, which is well in excess of any estimates of what Chemtura would have received in the class settlement with Solvay, had it not opted out of that settlement. Counsel estimates that Chemtura might have received funds in the range of $400,000 to $1.3 million out of the Solvay class settlement (depending on whether Chemtura s allowed purchases amount to anywhere from 1.5 percent to 5 percent of total allowed purchases). 51. The Solvay Settlement is also reasonable in light of costs and risks facing Chemtura in the Chemtura Action. In order to bring the claims forward, the Debtors likely would have to expend in excess of $1 million in expert, discovery and other expenses. Although prevailing through trial and judgment would result in trebled damages and the right to an award of reasonable attorneys fees and certain costs, the class settlements (which provide purchases from 1994 to 2001 ten times the weight of subsequent purchases) demonstrate the difficulty of proving damages after In addition, counsel for Solvay have explained that Solvay would present expert testimony disputing any level of overcharges, so that damages would be in dispute, as well as any liability for any overcharges over the period prior to July Chemtura believes that the Solvay Settlement meets the requirements for compromises of controversy under Rule By reaching a settlement, Chemtura and Solvay 13

17 will avoid any additional expenses and the uncertainty that would be involved in continuing the litigation of the Chemtura Action and the Reclamation Demand. 53. The Solvay Settlement was reached after thorough analysis by the Debtors and Solvay of the various claims and defenses, and potential outcomes of the Chemtura Action, MDL and the Reclamation Demand. The Solvay Settlement, as evidenced by the Settlement Agreement, is unquestionably the product of arm s-length negotiations conducted by and between Chemtura and Solvay, meets the applicable legal standards and is well within the range of reasonableness as required under Rule 9019(a). C. Assumption of the Supply Agreement, as Amended, Meets the Requirements of 365 of the Code 54. The assumption and extension of the Hydrogen Peroxide Supply Agreement is similarly an appropriate exercise of Chemtura s business judgment. 55. First and foremost, the assumption of the Supply Agreement is an integral part of the Solvay Settlement, without which it is unclear a settlement could be accomplished. As set forth in substantial detail herein, the Solvay Settlement meets the applicable legal standards and is well within the range of reasonableness. Specifically, the Solvay Settlement provides for a global resolution of the disputes between the parties, and results in substantial benefits to the Debtors while allowing the Debtors to avoid the significant risks and accrual of expenses associated with the litigation of the disputes between the Debtors and Solvay. 56. Beyond the benefits associated with the resolution of the disputes between the parties, analysis of the assumption of the Supply Agreement independent of the Solvay Settlement shows that the assumption of the agreement is a reasonable exercise of the Debtors informed business judgment. 14

18 57. The Supply Agreement sets the purchase price for hydrogen peroxide at $0.315 per pound, which Chemtura asserts is a reasonable price based upon today s market standard. Further, the price includes the cost of delivery, and Solvay s production facilities are located fairly close to Chemtura s principal plant that utilizes the hydrogen peroxide. Based upon such proximity, Solvay is well positioned to supply Chemtura at a reasonable price. 58. The Debtors decision to assume the Supply Agreement was made after the Debtors management fully vetted the benefits of the assumption, as well as explored and examined other options by which the Debtors could receive a comparable supply of hydrogen peroxide. Based upon the above-discussed facts, it is clear that the assumption of the Supply Agreement constitutes an reasonable exercise of the Debtors business judgment, rendering such assumption appropriate and warranted pursuant to Section 365 of the Bankruptcy Code. II. Approval of Payment of Contingent Fee and Expenses A. The Retention Order 59. On April 24, 2009, the Debtors filed an Application seeking, among other things, to employ Duane Morris as conflicts counsel to the Debtors in their Chapter 11 proceeding (the Retention Application ). Through the Retention Application, the Debtors also sought to employ Duane Morris as counsel to the Debtors with respect to certain litigation regarding the price fixing of hydrogen peroxide. 60. On May 5, 2009, this Court entered an Order approving the retention of Duane Morris as conflicts counsel to the Debtors. Subsequently, by Order dated May 15, 2009, this Court also approved the contingent fee retention of Duane Morris as counsel for the Debtors in connection with the action against Solvay in the Multidistrict Litigation In re Hydrogen Peroxide Antitrust Litigation, MDL No (the Retention Order ). A copy of the Retention Order is annexed hereto as Exhibit B. 15

19 61. The contingent fee agreement approved by this Court under the Retention Order provides for fees of twenty percent (20%) of the total value of the recovery and payment of expenses by the Debtor (the Contingent Fee Arrangement ). It further provides that any amounts Chemtura pays for expenses will be deducted from the recovery before calculating any fee based upon twenty percent (20%) of the recovery. 62. The expenses incurred total $1, Assuming payment of those expenses, the contingent fee based on the value of the Solvay Settlement ($2,999,980) less expenses ($1,037.87) is twenty percent (20%) of $2,998, or $599, The Solvay Settlement provides for the Settlement Payments to be transferred to a Duane Morris escrow account. Duane Morris is to deduct its fees and expenses, and remit the balance of the Settlement Payments to the Debtor. 63. Because Duane Morris will be compensated on a contingent fee basis with respect to its role as price fixing litigation counsel to the Debtors, the Retention Order provides that Duane Morris will not be required to submit daily time entries to the Court in connection with requests for Court approval of payment of fees. Rather, the Retention Order specifies that Duane Morris will provide the Court with a detailed summary explaining the services provided if and when the contingent fee is earned. That detailed summary is annexed hereto as Exhibit C. 64. Further, the Retention Order requires Duane Morris to separately account for expenses incurred in relation to its representation of the Debtors with respect to the price fixing litigation. An accounting of expenses is also annexed hereto as Exhibit C. 65. In light of the Debtors bankruptcy filing, Duane Morris agreed to waive all prepetition expenses incurred in connection with the Debtors price fixing litigation, which expenses totaled approximately $3,

20 B. The Contingent Fee, Pursuant To The Contingent Fee Agreement Previously Approved By The Court, And Expenses Are Reasonable And Should Be Approved By The Court 66. As noted above, the Retention Order approved the Contingent Fee Arrangement, which provides for payment to Duane Morris of a fee of 20 percent of the total value of any recovery, and for the Debtors to bear expenses. 67. As further noted above, pursuant to the Contingency Fee Arrangement, Duane Morris is entitled to receive $599,788.43, plus reimbursement of expenses in the amount of $1, Pursuant to the terms of the Solvay Settlement, the Settlement Payments would be made to a Duane Morris account, and Duane Morris would deduct its expenses of $1, and the contingency fee of $599,788.43, and promptly remit the remainder to the Debtors. 69. Class plaintiffs in the MDL generally have been awarded fees of 30 percent of the total recoveries and expenses as approved by the District Court. The Duane Morris fees, plus minimal expenses, amount to approximately 20 percent of the total value of the recovery, which are reasonable and appropriate, consistent with the Bankruptcy Court s prior approval of the Contingent Fee Agreement. 70. It is further noted that the Debtors likely will receive payments in the range of $1 million to $2 million from the class settlements with Degussa defendants, Akzo Noble defendants and Kemira defendants. Duane Morris assisted Chemtura pre-petition with the filing of a proof of claim in connection with those settlements, but agreed in the Contingent Fee Agreement that Duane Morris would not be entitled to any fee based on a percentage of those class settlements. 71. In addition, in January 2009 class plaintiffs entered into a settlement agreement with Arkema defendants and in April 2009 class plaintiffs entered into a settlement agreement 17

21 with FMC Corporation. In requesting approval of the Contingent Fee Agreement by the Bankruptcy Court, Duane Morris agreed that, in the event that the Debtors determined to participate in class settlements with Arkema defendants and FMC Corporation, Duane Morris would not seek any fee based on Chemtura s recovery in those class settlements. Chemtura did, in fact, determine not to opt out of class settlements with Arkema defendants and FMC Corporation. Thus, amounts estimated in the range of $150,000 to $200,000 should be received by the Debtors net of class plaintiffs counsels fees (30 percent of the total class recovery of $10 million), and expenses in connection with the class settlements with Arkema defendants and FMC Corporation, and without any fee to Duane Morris, notwithstanding the work of Duane Morris in bringing the claims against Arkema defendants and FMC Corporation in the Chemtura Action, and advising the Debtors in connection with the decision whether or not to opt out of the class settlements with Arkema defendants and FMC Corporation. 72. For the reasons described above, particularly given that the Debtors estates unquestionably benefit from the Solvay Settlement, the payment of the fees and expenses of Duane Morris should be approved consistent with the Retention Order, all as detailed above. NOTICE 73. Notice of the Motion has been provided to: (a) the United States Trustee; (b) counsel to the Official Committee of Unsecured Creditors; (c) counsel to Solvay; and (d) all other parties required to receive notice pursuant to this Court s Order Establishing Notice Procedures. 74. The Committee has reviewed the terms of the Solvay Settlement and has no objection to the approval of the Settlement Agreement. 18

22 other court. NO PRIOR REQUEST 75. No previous request for the relief sought herein has been made to this or to any WHEREFORE, the Debtors respectfully request that this Court (a) enter an Order substantially in the form annexed hereto as Exhibit D, granting the relief requested herein; and (b) permit the Parties to proceed without hearing via a Notice of Presentment. Dated: New York, New York July 27, 2009 DUANE MORRIS LLP /s/ Gerard S. Catalanello Gerard S. Catalanello, Esq. James J. Vincequerra, Esq Broadway New York, New York (212) (212) (facsimile) gcatalanello@duanemorris.com jvincequerra@duanemorris.com Conflicts and Other Counsel to the Debtors and Debtors-in-Possession 19

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44 Exhibit C Detailed Summary of Services Rendered by Duane Morris LLP and Accounting of Expenses Incurred by Duane Morris LLP 22

45 SERVICES RENDERED BY DUANE MORRIS LLP IN CONNECTION WITH ITS REPRESENTATION OF THE DEBTORS WITH RESPECT TO PRICE FIXING LITIGATION 1. Duane Morris consulted with in-house counsel for Chemtura and reviewed data on Chemtura purchases and supply agreements, interviewed certain Chemtura employees regarding purchases and the market for hydrogen peroxide, reviewed materials regarding class settlements with certain defendants, and assisted Chemtura with its proof of claim for class settlements. Duane Morris extensively researched Chemtura s claims against Solvay, FMC Corporation and Arkema defendants including review of extensive publically available pleadings, motion papers and other filings in the MDL and research on publically available information on the hydrogen peroxide market and prices, and other information regarding Solvay, FMC and Arkema and the alleged price fixing conspiracy, conducted legal research and drafted, reviewed with Chemtura and filed, served, and had translated and served on foreign defendants a complaint asserting claims regarding a violation of Section 1 of the Sherman Act. 2. Duane Morris conferred with class plaintiffs counsel and counsel for defendants regarding the claims, reviewed and agreed to the terms of the protective order regarding discovery in the MDL, and sought and reviewed certain additional information from Solvay s counsel relating to the claims, market and potential damages. After further research and preparation, together with in-house counsel for Chemtura, Duane Morris met with Solvay s counsel and exchanged information on strengths, weaknesses and risks of both sides in litigation of the Chemtura Action. Duane Morris and in-house counsel for Chemtura exchanged settlement proposals with Solvay and its counsel. 3. Duane Morris monitored developments in the MDL including settlement proceedings, the Court of Appeals reversal of class certification and the closing of the 23

46 Department of Justice investigation, and conferred with counsel for other parties in connection with access to information and in assessing strengths and weaknesses of the parties claims. 4. Duane Morris discussed with bankruptcy counsel for the Debtors potential means to resolve reclamation claims and address the Supply Agreement in conjunction with settlement of the Chemtura Action, drafted a proposed settlement agreement including resolution of those matters and communicated with counsel for Solvay and with in-house counsel and business people within Chemtura to resolve remaining disputed issues. 5. Duane Morris drafted and exchanged several iterations of settlement agreement drafts and followed up with communications with counsel for Solvay and with Chemtura regarding edits and the resolution of remaining issues. Duane Morris further consulted with counsel for the Official Committee of Unsecured Creditors regarding the issues in the litigation and terms of the proposed settlement. 6. In addition to work directly connected to the antitrust claims, Duane Morris has rendered services in connection with the Solvay Settlement for which the Debtors otherwise would have had to retain and pay bankruptcy counsel, but which services Duane Morris has provided to the Debtors within the scope of the Contingent Fee Agreement. For example, the Solvay Settlement entails resolution of a reclamation claim and a determination to affirm an executory supply contract, and further entails obtaining support, clearance and approval of various constituencies in the Chemtura Bankruptcy, and approval of the Solvay Settlement in the Chemtura Bankruptcy, all of which have principally been addressed through bankruptcy legal services rendered by Duane Morris pursuant to the Contingent Fee Agreement, and the payment for which is encompassed in the contingent fee. 24

47 7. Further, Duane Morris reviewed FMC and Arkema class settlement papers and conferred with counsel for FMC Corporation and counsel for Arkema defendants, and class plaintiffs counsel in connection with the determination of the Debtors whether to opt out of the Arkema and FMC class settlements. Duane Morris met with counsel for Arkema and reviewed detailed information provided by counsel for Arkema in connection with that determination, drafted and filed papers with the District Court seeking an extension to obtain approval of the Bankruptcy Court, and papers with the Bankruptcy Court to obtain approval to settle claims against Arkema and FMC Corporation through the class settlements. As noted above, any compensation for those services is included in the contingent fee with respect to the Solvay Settlement, as Duane Morris agreed not to seek any percentage of recovery through those class settlements. 25

48 Exhibit D Proposed Order 26

49 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) CHEMTURA CORPORATION, et al., 1 ) Case No (REG) ) Debtors. ) Jointly Administered ) ORDER APPROVING (I) A SETTLEMENT BETWEEN CHEMTURA CORPORATION AND SOLVAY S.A., SOLVAY CHEMICALS, INC. AND SOLVAY AMERICA PURSUANT TO FED. R. BANKR. P INCLUDING DEBTORS ASSUMPTION OF A SUPPLY AGREEMENT (AS AMENDED) WITH SOLVAY, AND (II) PAYMENT OF FEES AND COSTS TO COUNSEL FOR DEBTORS PURSUANT TO CONTINGENT FEE AGREEMENT PREVIOUSLY APPROVED BY THE COURT Upon the motion (the Motion ) 2 of Chemtura Corporation ( Chemtura ) and certain of its subsidiaries and affiliates, as debtors and debtors-in-possession in the above-captioned Chapter 11 cases (collectively, the Debtors ), for an Order pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and Section 365 of Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code ) authorizing the Debtors to (i) enter into a settlement (the Solvay Settlement ) between the Debtors and Solvay S.A., Solvay Chemicals, Inc. and Solvay America (collectively, Solvay ), the terms of which 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayeridentification number, are: Chemtura Corporation (3153); A&M Cleaning Products, LLC (4712); Aqua Clear Industries, LLC (1394); ASCK, Inc. (4489); ASEPSIS, Inc. (6270); BioLab Company Store, LLC (0131); BioLab Franchise Company, LLC (6709); Bio-Lab, Inc. (8754); BioLab Textile Additives, LLC (4348); CNK Chemical Realty Corporation (5340); Crompton Colors Incorporated (3341); Crompton Holding Corporation (3342); Crompton Monochem, Inc. (3574); GLCC Laurel, LLC (5687); Great Lakes Chemical Corporation (5035); Great Lakes Chemical Global, Inc. (4486); GT Seed Treatment, Inc. (5292); HomeCare Labs, Inc. (5038); ISCI, Inc. (7696); Kem Manufacturing Corporation (0603); Laurel Industries Holdings, Inc. (3635); Monochem, Inc. (5612); Naugatuck Treatment Company (2035); Recreational Water Products, Inc. (8754); Uniroyal Chemical Company Limited (Delaware) (9910); Weber City Road LLC (4381); and WRL of Indiana, Inc. (9136). 2 Unless otherwise defined herein, all capitalized terms shall have the meaning ascribed to them in the Motion.

50 are reflected in the Settlement Agreement and Release annexed to the Motion as Exhibit A (the Settlement Agreement ), all as more fully described in the Motion, (ii) assume a supply agreement, as amended, for purchase of hydrogen peroxide from Solvay, and (iii) pay attorneys fees and costs to Debtors counsel Duane Morris LLP pursuant to a contingent fee arrangement previously approved by the Court; and this Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 1334; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C and 1409; and this Court having determined that, given the circumstances described in the Motion, due and proper notice of the Motion having been provided pursuant to Bankruptcy Rules 2002, 6004 and 9006 and Rule of the Local Bankruptcy Rules for the Southern District of New York; and it appearing that no further notice of the Motion or the relief requested therein need be provided; and this Court having reviewed the Motion and all objections and responses thereto (if any); and this Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and this Court having determined that entering into the Solvay Settlement constitutes an appropriate exercise of the Debtors reasonable business judgment, and is otherwise in the best interests of the Debtors, their estates, creditors and other parties in interest; and upon all of the proceedings had before this Court, and after due deliberation and sufficient cause appearing therefor, it is hereby, ORDERED that the Motion is granted, as set forth herein; and it is further ORDERED that the Settlement Agreement attached to the Motion as Exhibit A is hereby approved in its entirety, and it is hereby K&E

51 ORDERED that the Debtors are hereby authorized pursuant to Section 365 of the Bankruptcy Code and Bankruptcy Rule 9019 to take any and all actions necessary to consummate the Solvay Settlement as set forth in the Settlement Agreement, including the assumption and extension of the Supply Agreement pursuant to Section 365(a); and it is further ORDERED that, without limiting the foregoing, the Debtors are hereby authorized to accept, and Solvay is authorized to make, all payments required, and in accordance with the terms of the Solvay Settlement, without further Order of this Court; and it is further ORDERED that, in accordance with the terms of the Solvay Settlement, Solvay is authorized to transfer such payments to the escrow account of Duane Morris LLP; and it is further ORDERED that the Debtors are authorized to pay Duane Morris LLP $600,826.30, which amount represents $1, for expenses incurred, plus the contingent fee amount of $599, earned based on the value of the Solvay Settlement, pursuant to the contingency fee arrangement previously agreed to by the Debtors and Duane Morris LLP, which agreement was approved by this Court on May 15, 2009 [Docket No. 396]; and it is further ORDERED that Duane Morris is thereby authorized to deduct its fees and expenses from the total amount of settlement proceeds transferred into its escrow account by Solvay in accordance with the terms of the Solvay Settlement, and remit the balance of the settlement proceeds to the Debtors; and it is further K&E

52 ORDERED that the terms and conditions of this Order shall be effective immediately, and shall be enforceable upon its entry. New York, New York Date: August, 2009 HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE 4 K&E