LyondellBasell Industries announced Jan. 6 that its U.S. operations and one of its European holding companies, Basell Germany Holdings GmbH, filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in order to facilitate a restructuring of its debts.

“We have been working collaboratively with our creditors and our equity holder on a financial restructuring that reflects the realties of today’s market environment and positions us for the future,” said LyondellBasell’s CEO Volker Trautz.

LyondellBasell owns and operates an oil refinery in Houston, Texas, and a second one in France. The Houston refinery is a conversion facility capable of processing significant quantities of heavy, high-sulfur crude oil into refined products. The company acquired its refinery in France, located in Berre l’Etang, on April 1, 2008.

“During the past two quarters, we have seen a dramatic softening in demand for our products and unprecedented volatility in raw materials costs. December was particularly difficult, as many of our customers postponed orders to reduce their inventories. Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term,” said Trautz.

LyondellBasell also said, pending court approval, that the company has made arrangements for up to $8 billion in debtor-in-possession financing to fund continuing operations. Of that total, $3.25 billion consists of new funding, $3.25 billion represents a refinancing of certain obligations under LyondellBasell’s existing senior secured credit facilities and $1.515 billion represents replacement of existing working capital facilities.

Trautz said the company’s goal during this process is to “continue its operations and its relationships with customers and suppliers in the normal course.” He said the company began taking steps to control costs as demand began to weaken and raw material costs started to fluctuate.

“Over the past several months, we announced plans to significantly reduce headcount and also reduced capital expenditures and working capital. We have also idled certain facilities and reduced production and processing at others. We are aggressively exploring additional ways to lower our costs and streamline operations in response to a very difficult global economic environment.”

Trautz continued, “Our core businesses—fuels, chemicals, plastics and technology—are fundamental to the global economy.” LyondellBasell’s products are used in a broad range of applications and in numerous products including: transportation, fuels (gasoline and diesel), rigid and flexible packaging, plastic pipe, detergents, cosmetics, electronics, appliances, automotive parts, paints and coatings, furnishings, construction and building materials and many other industrial and consumer goods applications.

LyondellBasell’s non-U.S. operating entities will continue to function independent of the Chapter 11 process.