In Re Chemtura Corp.

BENCH DECISION 1 ON CONFIRMATION

Bench Decision on Confirmation.566

Findings of Fact.568

1. Background .568

2. Pre-Petition Debt and Liabilities.568

3. Bankruptcy Filing.569

4. PosL-Petition.569

5. The Plan.569

6. Marketing of the Company.572

7. Valuation.572

A. The Experts’ Analyses.572

B. The Experts’Methodologies.574

i. Discounted Cash Flow.574

ii. Comparable Companies.575

iii. Precedent Transactions.577

C. Valuation Conclusions.579

i. Methodology.579

ii. DCF Analysis.581

iii. Comparable Companies Analysis.583

*567 iv. Precedent Transactions Analysis.584

v. Marketing Efforts.586

vi. Creditors’ Preferences for Cash .587

vii. Credibility.588

D. Conclusions re: Valuation.590

8. Reasonableness of the Settlement .591

9. Good Faith.591

10. Ultimate Findings of Fact.592

Discussion.592

1. ’’Fair and Equitable” under Section 1129(b)(1).592

2. The Settlement.593

A. Standards for Approval of Settlement.593

B. Settlement Analysis.595

i. Issuance of New Common Stock.595

ii. Make-Whole and No-Call Provisions.596

iii. Other Settlement Components.606

iv. Other Iridium Factors.607

3. Other Objections.608

A. Good Faith.608

B. Releases .609

C. Dissolution of Equity Committee.612

4. Miscellaneous Objections.613

Conclusion.614

In this contested matter in the chapter 11 cases of specialty chemicals company Chemtura Corporation (“Chemtura”) and its affiliates (collectively, the “Debtors”), the Debtors seek confirmation of their chapter 11 plan (the “Plan”). Confirmation is supported by the Official Committee of Unsecured Creditors (the “Creditors’ Committee”) and an ad hoc committee of Chemtura bondholders (the “Bondholders Committee,” 2 and together with the Debtors and the Creditors’ Committee, the “Plan Supporters”). But confirmation is opposed by the Official Committee of Equity Security Holders (“the Equity Committee”), and two other entities that are equity holders or act on equity holders’ behalf.

The Equity Committee expresses several objections to confirmation. But the most serious of them is that the Plan — which as described below, effects its distributions to bondholders and most other creditors by means of a combination of cash and stock — undervalues the Debtors, and that a global settlement of several constituencies’ entitlements (the “Settlement”), upon which the Plan is based, does likewise. While the Plan proposes a distribution to equity, the Equity Committee contends that the Plan doesn’t deliver enough — -and, as relevant to the Code’s requirements for confirmation, that each of the Settlement and the Plan provide for payment to creditors more than in full, violating section 1129(b)’s “fair and equitable” requirement. 3

*568 After an evidentiary hearing focusing nearly entirely on the disputed issues of valuation, I find that the Debtors’ total enterprise value (“TEV”) is no higher than the valuation upon which the Settlement was based. Under those circumstances, I find that the creditors in this case will not be overpaid, or, more to the point, will not be paid more than in full.

As I ultimately reject most of the remaining Equity Committee contentions as well, 4 the Plan will be confirmed. The Plan Supporters may, if they wish, give me more extensive Findings of Fact and Conclusions of Law that also cover matters that were not in controversy. My Findings of Fact and Conclusions of Law on the basic background and disputed matters follow.

Findings of Fact

1. Background

On March 18, 2009 (the “Filing Date”), Chemtura, a publicly-traded company, and 27 of its affiliates filed chapter 11 petitions in this Court. The Debtors produce specialty chemicals, polymer products, crop protection chemicals, and pool and spa chemicals. They have operations in the U.S. and Canada and hold direct and indirect interests in more than 140 nondebtor affiliates world-wide.

The Debtors’ specialty chemical products are sold to industrial manufacturing customers for use as additives, ingredients, or intermediates; the company’s crop protection products are sold globally through distributors and dealers to growers of produce; and the company’s pool and spa chemicals are sold to consumers through local dealers, large retailers, and mass merchants.

2. Pre-Petition Debt and Liabilities

On the filing date, the Debtors had funded debt facilities with a face amount of approximately $1.37 billion, including:

(a) $870 million outstanding under 7% unsecured notes due 2009 (the “2009 Notes”);

(b) $500 million outstanding under 6.875% unsecured notes due 2016 (the “2016 Notes”);

(c) $150 million outstanding under 6.875% unsecured debentures due 2026 (the “2026 Notes”); and

(d) a $850 million secured and unsecured revolving credit and letter of credit facility with a maturity date of 2010.

In addition to their funded debt and trade debt, the Debtors also had other liabilities that they’d need to address. When the chapter 11 cases were filed, the Debtors were paying for remediation activities, engaged in litigation and administrative proceedings, and defending investigations for potential environmental liabilities at nearly 200 sites in the United States. They also faced potential fines from the U.S. EPA, 6 putative class action lawsuits, and 15 other lawsuits, all arising from a 2004 fire at their warehouse in Conyers, Georgia.

In addition, 23 lawsuits were pending against the Debtors based upon allegations that exposure to Diacetyl, a butter flavoring ingredient distributed by Chemtura and produced by one of its affiliates before 2005, caused respiratory illness in numerous food industry factory workers. And *569 the Debtors also had significant legacy liabilities with respect to pension obligations and medical and life insurance benefits for retired employees.

S. Bankruptcy Filing

These debts and legacy liabilities, combined with sharp declines in demand and restricted access to credit resulting from the global recession, forced the Debtors into reorganization in March 2009.

b. Post-Petition

After the Filing Date, the Debtors continued to operate their businesses as debtors in possession and improved their financial condition, particularly as a consequence of settling and otherwise reducing claims. More than 8,300 claims filed against the Debtors were expunged or altered, leading to a reduction in liabilities of more than $9.4 billion. The Debtors reached settlements with all of the Diace-tyl claimants; reached settlements with respect to their insurance coverage for their Diacetyl liabilities; and put agreements into place with most of the regulatory authorities to resolve preexisting environmental remediation liabilities. Though they disagree as to the extent, all constituencies in this case now agree that, due in substantial part to the resolution of these liabilities, the Debtors are once again solvent.

In addition, the Debtors’ management team formulated a Long Range Plan (the “LRP”) by directing each business unit and cost center to, among other things, identify specific initiatives that could drive revenue growth and reduce costs, and then to build its own projections. 5 By aggregating these projections, management projected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) 6 for the period 2010 through 2014. A macroeconomic assumption that drove management’s LRP was that economic activity would recover to 2007 levels by 2011, resulting in increased earnings each year through 2014. 7 The Debtors’ actual EBIT-DAR through the end of the second quarter was $167 million, which was $30 million ahead of the LRP projected EBITDAR for this period. 8 But in July, EBITDAR was “roughly on budget”, 9 and in August, the Debtors missed budget by $4 million. 10 The Debtors have not changed their projections for the year as whole.

5. The Plan

On June 17, 2010, the Debtors filed the Plan and disclosure statement (the “Disclosure Statement”). The foundation for the Plan was the Settlement, which was negotiated between the Debtors, the Creditors’ Committee, the Bondholders’ Committee, and the Pension Benefit Guarantee Corporation (“PBGC”). In this settlement, the parties resolved a number of key issues:

a. Debtors’ total enterprise value for Plan and distribution purposes: In accordance with a June 4 valuation of the Debtors’ TEV prepared by Lazard (the “Lazard June Report”), the Plan would be based on a value of Chemtura of $2.05 billion.

*570 b. Make-whole and no-call settlement: The parties agreed that the 2016 and 2026 Notes would be paid, rather than reinstated. In addition, the Debtors agreed to pay nearly $70 million to the 2016 and 2026 bondholders to settle potential claims for alleged breaches of the Make-Whole provision in the 2016 Notes and the No-Call provision in the 2026 Notes. The Ad Hoc Bondholders’ Committee asserted that, if allowed in full, these claims would total approximately $170.4 million.

c. Payment of certain unsecured creditors, including bondholders, with a combination of New Common Stock and cash: The parties agreed that, as discussed below, certain unsecured creditors, including those holding the 2016 and 2026 Notes, would be paid with a combination of common stock of a reorganized Chemtura (“New Common Stock”) and cash, while other unsecured creditors, such as holders of Diacetyl and environmental claims, would be paid entirely in cash.

d. Settlement with the PBGC (the “PBGC Settlement”): The Plan also contemplates, as part of the of the Global Settlement, that the Debtors will make a one-time cash contribution in the amount of $50 million to the Chemtura Retirement Plan on the Effective Date, and neither the Debtors nor the Reorganized Debtors will elect to apply any portion of the $50 million contribution to increase the Chemtura Retirement Plan’s “prefunding balance.” In exchange for these concessions, the PBGC has agreed not to initiate termination of the Debtors’ single-employer pension plans based on the terms of the Debtors’ proposed restructuring.

e.Reimbursement of Bondholders’ professional fees and expenses: The global settlement provided that the Debtors and Creditors’ Committee would not object to the payment of fees and expenses to the Bondholders’ Committee up to $7 Million.

Although the Debtors are solvent, the Plan does not provide for a simple “waterfall” recovery of residual equity to Chem-tura’s common stockholders (“Equity”). Under the Plan, a distribution pool (the “Distribution Pool”) will be established from which distributions will be made to 2009, 2016, and 2026 bondholder claims, prepetition unsecured lender claims, and “General Unsecured Claims” 11 (collectively, the “Participating Creditor Classes”). The Distribution Pool will be funded with

(a) available cash following payment of the Diacetyl claims and Unsecured Convenience Claims and the funding of the Environmental and Disputed Claims Reserves,

(b) proceeds of a $100 million rights offering (“Rights Offering”), and

(c) the New Common Stock, subject to reduction of 5% in amount for holders of interests and up to $100 million in value made available to holders of interests in the form of the Rights Offering. 12

*571 The Participating Creditor Classes have the right to elect recovery in the form of the maximum available percentage of cash or New Common Stock, to the extent such recovery is available from that Distribution Pool. 13

By these means, the Plan seeks to strengthen the Debtors’ balance sheet, and to materially deleverage them. Upon the date that the Plan, after confirmation, goes effective (the “Effective Date”), the Debtors will have approximately $750 million in funded debt, just over 50% of the prepetition amount. 14 The Debtors’ costs of emergence, including the cash required for distribution in settlement of certain claims, will be financed primarily from an Exit Financing consisting of a $275 million senior secured asset-based revolving credit facility, a $295 million senior secured term loan, and $455 million of unsecured senior notes due 2018. Under the plan, reorganized Chemtura will issue up to 100 million shares of New Common Stock for distribution on the Effective Date. 15

Because the Debtors are solvent, creditors will be left unimpaired, reinstated, or paid in full. They also will get postpetition interest. Diacetyl claims, all of which have been resolved by settlement, will be paid in full in cash. 16 The Plan creates a reserve (the “Environmental Reserve”), to be funded wholly in cash, for federal or state environmental law claims against the Debtors held by governmental units that have not yet been settled or received requisite regulatory approval. 17 The Plan also establishes a reserve (the “Disputed Claims Reserve”) for the benefit of holders of general unsecured claims that remain disputed as of the Effective Date. To the extent such claims are allowed after the Effective Date, they’ll be paid out of the Disputed Claims Reserve, funded by a mixture of New Common Stock and cash. 18

If Equity as a class had voted in favor of the Plan, then equity holders would have had a guaranteed recovery of 5% of the New Common Stock and the right to participate pro rata in the Rights Offering. In addition, Equity would not have borne the risk that the eventual amount of allowed claims would exceed the Debtors’ estimates. But in balloting, Equity voted against the Plan. Thus, if I confirm, Equity will receive distributions of whatever cash and New Common Stock is available after all allowed claims have been paid in full, and the Environmental and Disputed Claims Reserves have been fully funded in the amounts I ultimately require. 19

On August 9, 2010, I authorized the Debtors to enter into a Plan Support Agreement with the Creditors’ Committee and certain of the members of the Ad Hoc Bondholders’ Committee. 20 The Plan Support Agreement (“PSA”), which embodies the terms of the Settlement, requires its creditor signatories to vote in favor of the Plan.

*572 After the balloting came in, the Plan was accepted by all creditor classes, with votes ranging from 93% to 100% in amount, and 91 % to 100% in number. But it was rejected by the Equity, with acceptances of only 26% in amount. 21

6. Marketing of the Company

After the Debtors issued the Plan and Disclosure Statement, but before the time for voting on the Plan, the Equity Committee, in the hope of having a fully-funded alternative plan, marketed Chemtura to try to secure investors willing to purchase equity in it. Although the Debtors had plan exclusivity, and on July 21, 2010 defeated an Equity Committee motion to end exclusivity, they cooperated in the Equity Committee’s marketing efforts, in a manner that I find to be in good faith and fully satisfactory.

A total of 19 parties were contacted, and the Debtors signed non-disclosure agreements with 7 investors, including certain members of the Equity Committee themselves. The presentations made to these potential investors relied on valuation reports prepared by UBS in June 2010 (the “Paulson Presentation”), 22 which estimated the TEV of Chemtura to be between $2.2 and $2.7 billion. 23 The Equity Committee’s attempts to solicit investments at that value, or any other, were ultimately unsuccessful. 24 That fact, along with others, informs my finding, discussed below, that the Debtors’ TEV is not as high as the Equity Committee contends.

7. Valuation

A The Experts’Analyses

Before the valuation hearing (and in the Debtors’ case, before the Settlement was reached), the Debtors and Equity Commit-

Class Name Class Description Amount Accepting Number Accepting

Prepetition Secured Lender Claims $26,617,022.27 (100%) 3 (100%)

4a General Unsecured Claims against Chemtura Corp. $52,777,334.84 (93%) 138 (91%)

4b General Unsecured Claims against Subsidiary $15,098,122.32 109 Debtors(99%)(93%)

Prepetition Unsecured Lender Claims $126,867,300.87 (100%) (100%)

2016 Notes Claims $422,441,690.00 (99.8%) 126 (99.2%)

2009 Notes Claims $330,169,000.00 (99.5%) 119 (98.3%)

2026 Notes Claims $136,029,000.00 (95.7%) 71 (97,3%)

10 Diacetyl Claims $52,210818.00 (97%) 364 (99%)

11 Environmental Claims $1,694,983.50 (100%) 6 (100%)

13a Interests in Chemtura Corp. 42,062,054.6497 (25.94%) N/A *573 tee each secured expert opinions as to the Debtors’ TEV, reflected first in expert reports and then in testimony before me. 25 The Debtors’ analysis, dated August 29, 2010 and also prepared by Lazard (the “Lazard Expert Report”) estimated the Debtors’ TEV to be in a range of $1.9 billion to $2.2 billion, with a midpoint at $2.05 billion. 26 The Equity Committee’s analysis, expressed in a report prepared by UBS on August 29, 2010 (the “UBS Expert Report”), estimated the Debtors’ TEV to be in a range of $2.3 billion to $2.6 billion, with a midpoint of $2.45 billion. 27

Both the Lazard and UBS analyses employed three standard valuation methodologies:

(i) discounted cash flow (“DCF”);

(ii) comparable companies (“Comparable Companies”); and

(iii) precedent comparable transactions (“Precedent Transactions”).

Lazard prepared a chart, colloquially referred to as the “football field,” upon which the valuation ranges that resulted from each methodology appeared, and which showed a range near the middle where the individual methodology results, for the most part, overlapped. This area of overlap correlated to Lazard’s conclusion of that valuation range of $1.9 billion to $2.2 billion. 28 The UBS Report, under UBS policy, did not include a football field. 29

The Creditors’ Committee also obtained expert analysis as to TEV. It secured an expert opinion from its financial advisor, Houlihan, Lockey, Howard & Zukin, confirmed in a report dated August 29, 2010 (the “Houlihan Expert Report”), and thereafter, live testimony.

The Houlihan analyses did not provide a valuation of Chemtura, but instead critiqued the analyses of Lazard and, particularly, UBS. Houlihan made a number of observations, many of which I ultimately came to agree with, the most significant of which were that:

(a) Chemtura had historically traded at a discount relative to its peers prior to the bankruptcy, and that any valua *574 tion would require a discount as a consequence; and

(b) the Debtors’ admittedly aggressive projections in the LRP were overly aggressive, because they were based on assumptions of near-term economic growth that were not supported by recent evidence, and that any valuation of Chemtura that assumed that the Debtors would exceed their 2010 EBITDA forecast or meet their projections for 2011-2014 would, without appropriate risk adjustments, overstate the value of the Debtors. 30

B. The Experts’Methodologies

Though Lazard and UBS implemented their methodologies in different ways (and seemingly modest differences in assumptions, comparables, and means of implementation resulted in substantial differences in valuation), their basic methodologies were largely similar. 31 Each, as noted, gave at least some attention to DCF, Comparable Companies, and Precedent Transactions. And they applied those valuation techniques in largely similar ways — though UBS did not compute actual valuations based on the latter two means, and instead used them only as a check on its DCF conclusion.

i. Discounted Cash Flow

The DCF valuation methodology estimates the net present value of a company by:

(i) projecting unlevered free cash flows over a given fixed forecast period, then discounting those cash flows back to the present using an estimated discount rate based upon the company’s weighted average cost of capital (“WACC”) and

(ii) deriving the value of all unlevered free cash flows beyond the explicit forecast period — the “terminal value” — and then discounting that terminal value back to the present by applying the estimated discount rate. 32

The enterprise value is determined by adding the numbers derived from (i) and (ii).

Translating that technical jargon into more easily understood terms and applying it here, the two DCF analyses computed TEV by adding the present value of two assumed future cash flow streams:

(1) the cash flow projected for each of years during which the LRP made a specific projection, and

(2) the cash flow projected for the period thereafter, as derived from a figure — the terminal value — that was used as a basis to capture those later cash flows.

With respect to the years for which there was a specific forecast, Lazard and UBS, for the most part, 33 used the annual future cash flows from 2010 to 2014 that *575 had been projected in the LRP. 34 The two also used similar discount rate rates. 35 In their terminal value calculations, however, the two reports differed, most significantly, in the EBITDA value to which the multiples were applied.

To calculate terminal value, UBS applied its multiples to the EBITDA for the last year of the forecast period (2014), or $528 million, taken from the Debtors’ LRP. 36 Discount rates between 11.6% and 13.6% were applied. 37 Using this method, UBS calculated a DCF range for TEV between $2.47 billion and $2.927 billion. 38

Lazard calculated terminal value by applying multiples of a higher 6.5x to 7.5x based on an analysis of enterprise values and 5-year and 3-year average EBITDA for the peer group to a mid-cycle or normalized EBITDAR of $404 million. 39 The mid-cycle EBITDAR was based on the average of 2009 through 2014 EBITDAR, which included both actual results and forecasted EBITDAR from the LRP. 40 La-zard applied discount rates between 11.75% and 13.75% and calculated the Debtor’s TEV range to be between $2.175 billion and $2.570 billion. 41

Lazard’s witness explained that a multiple of mid-cycle EBITDAR was used to account for the cyclical nature of the Debtors’ earnings and cash flows after the projection period. 42 But UBS and Lazard debated the extent of the Debtors’ cyclicality, which could affect the appropriate terminal value calculation. UBS contended that Lazard’s use of a normalized EBIT-DAR inappropriately drove the present worth of the terminal value down. 43 Conversely, Lazard contended that UBS’s use of the EBITDAR for the final year, at a level never before achieved in Chemtura’s history, caused the UBS DCF analysis to significantly overstate value. 44

ii. Comparable Companies

The comparable company analysis estimates the value of a firm by taking the value of comparable peer firms and using them values as an indicator of the subject company. Values are standardized using one or more common variables such as revenue, earnings, or cash flow, with the expert then applying a multiple of the financial metric or metrics that yields the market’s valuation of these comparable companies. 45 A key element in this analysis is the choice of the “comparables” — the selection of companies that are most comparable to the subject firm or its specific businesses. 46 Each of the Lazard and UBS expert reports gave at least some attention to both consolidated and sum-of-the-parts comparable company analyses. While the consolidated approach looks at comparables for the entire company as a whole, a “Sum-of-the-Parts” analysis uses *576 similar techniques for individual lines of the Debtors’ businesses and then aggregates those results to estimate overall TEV.

For the consolidated analysis, UBS examined 4 categories of multiples (LTM, and 2010, 2011 and 2012 Estimated EBIT-DAR) for each of 11 domestic companies in its peer group and calculated the mean multiple for each category. 47 Again, UBS did not actually calculate a TEV range from these mean multiples; it back-calculated multiples from its overall Chemtura TEV range of $2.3 million to $2.6 million using LTM and actual and projected EBITDAR to demonstrate the reasonableness of its estimated DCF TEV. 48 The UBS Report did provide an implied valuation range from its Sum-of-the-Parts analysis, which was $2,394 billion to $2,789 billion. 49

Lazard’s trading peer group contained 15 companies — 10 domestic and 5 foreign. 50 Lazard analyzed 5 categories of multiples on a full-company basis: multiples based on 2010 and 2011 Estimated EBITDAR, 2010 and 2011 Estimated EBITDAR less capital expenditures, 51 and 2010 Estimated EBITDAR, taking also into account underfunded pension and OPEB obligations, which Lazard referred to as “EBIT-DARP.” 52 Lazard also performed a Sum-of-the-Parts analysis.

In its various EBITDAR computations, Lazard, like UBS, used “6 + 6” figures— actual results for the first 6 months of 2010 and the LRP projections for the last 6 months — for the three 2010 analyses. Lazard applied the derived range of multiples to “6 + 6” figures for the three 2010 analyses, and to LRP projections for the 2011 analyses. 53

Three differences in those analyses are worthy of note. First, while UBS used foreign comparables in its Sum-of-the-Parts analysis but only domestic compara-bles in its consolidated company analysis, Lazard included foreign comparables in both. 54 UBS contended that the foreign companies were, on the whole, inappropriate comparables for Chemtura, and noted that Lazard’s inclusion of foreign companies (which all had EBITDA lower than any of the domestic companies) drove down the mean multiples and reduced the derived TEV for Chemtura by $198 million to $237 million. 55 However, Lazard and Houlihan contended that any analysis could not exclude foreign companies that were otherwise comparable. And they *577 noted that in the period 2005 to 2008, Chemtura on average traded below its full peer group — including Lazard’s foreign and domestic comparables. 56

Second, UBS’s list of comparables included DuPont and PPG Industries, but not Solutia, while the Lazard comparables contained the opposite. 57 Lazard and the Creditors’ Committee argued that the inclusion of DuPont and PPG, which are much larger than Chemtura and not specialty chemical companies, inappropriately inflated the multiples that UBS derived from the analysis, 58 and that the failure to include Solutia, an assertedly very similar company, did likewise. 59

Third, the Lazard and UBS analyses differed with respect to the year chosen for their Sum-of-the-Parts analysis. La-zard derived multiple ranges from select comparable companies’ business units, then valued unallocated corporate overhead using a weighted average multiple calculated on the basis of each business unit’s contribution to total to 2010 6 + 6 EBIDTAR. 60 Its estimated TEV range from this analysis was $1.88 billion to $2.28 billion. 61 By contrast, UBS pegged its valuations of the Debtors’ component businesses on multiples of 2011 EBITDAR. UBS found Lazard’s reliance on 2010 actual and projected numbers to be flawed, contending that generally by Q3, market valuations would be driven by projections for the following year, and that 2010 was a transition year for the Debtors, with uniquely depressed EBITDAR numbers. 62

in. Precedent Transactions

Precedent Transaction methodology applies multiples derived from the purchase prices of comparable companies in past M & A transactions to the subject firm’s LTM earnings, cash flow, or EBITDA to determine a range of TEV. 63 This method requires qualitative judgments in light of the unique circumstances of each precedent transaction and inherent differences between the precedent acquired companies and the subject company. 64 In considering the circumstances as to the various precedent transactions, the parties debated the extent to which a Precedent Transactions analysis would appropriately take into account the financial environment at the present time.

The Lazard Expert Report analyzed 14 transactions between 2004 and 2010, all between $1 billion and $10 billion in value. 65 But over this time, there were dramatic changes in the global economy and capital markets, as evidenced most dramatically by the economic and financial environments after the reversals suffered by Bear Stearns and Lehman Brothers. Considering these changes to be highly material, Lazard “reviewed many transactions and presented transactions from before the Lehman Brothers bankruptcy in [its] Report, but [ ] ultimately relied upon” the transactions that occurred after Sep *578 tember 15, 2008, the day Lehman Brothers filed for chapter ll. 66 Three transactions fell into this category: the K+S acquisition of Morton, the Bain acquisition of Styron Plastics, and the BASF acquisition of Cognis. 67

The mean EBITDA multiple for these three transactions was 6.2x. 68 Using that mean as a midpoint, Lazard determined the appropriate multiple range for Chem-tura to be 5.75x to 6.75x LTM estimated EBITDAR. 69 After applying this multiple range to LTM EBITDAR as of September 30, 2010, or $342 million, Lazard estimated the Debtors’ TEV to be between $1,970 billion and $2,315 billion. 70

The UBS Expert Report considered 19 transactions between 2005 and 2009, which had a range of values between $290 million and $18,666 billion and a mean EBITDAR multiple of 9.7x. 71 But UBS did not actually calculate a TEV range from these mean multiples. Instead, as a way to demonstrate the reasonableness of its TEV range, it took its estimated TEV range for the Debtors of $2.3 million to $2.6 million, and, using an LTM EBITDAR of $331 million, back-calculated EBITDAR multiples of 6.9x to 7.9x. 72 That back-calculated multiple range of 6.9x to 7.9x was lower than the Precedent Transaction analysis mean of 9.7x LTM EBITDAR, which caused UBS to believe that its TEV did not exceed the actual value of Chemtura. 73

With respect to their consideration of precedent transactions, the two reports differed materially in their lists of transactions considered. Most notably, UBS included many transactions pre-dating the Lehman bankruptcy and the change in the financial climate, while Lazard did not. Additionally, the Cognis transaction was omitted from the UBS Report and the Nufarm transaction was omitted from the Lazard report. UBS stated that the Cog-nis transaction was omitted because, as of the time of the report (and of the hearing), the Cognis deal had not closed. 74 Thus, the most recent (and only “post-Lehman”) transaction included in the UBS Expert Report was the Sumitomo acquisition of a 20% interest in Nufarm. Lazard explained that it excluded the Nufarm transaction from its Precedent Transactions analysis because Nufarm was only an appropriate comparable for the Debtors’ AgroSolutions business, but not for Chem-tura on a whole, and because Sumitomo was a “white knight” in that transaction. 75

However, Lazard and Houlihan contended that the heavy reliance by UBS on pre-Lehman transactions, entered into before the financial markets crashed, was a serious flaw.

Cutting in the other direction, however (though the parties would differ as to the extent), were differences in the Precedent Transactions analyses between the Lazard Expert Report (prepared in August) and *579 the earlier Lazard June Report. As mentioned above, in its Expert Report, Lazard relied on 3 post-Lehman Bankruptcy transactions — Morton Inc. (in April 2009), Styron Plastics (in March 2010), and Cog-nis (in June 2010) — -which Lazard placed above a dotted line in the reverse chronologically ordered table in the report. 76 The BASF acquisition of Ciba Inc. (in September 2008) and the Ashland acquisition of Hercules (in July 2008) fell below that line. In the earlier June Report, however, Lazard had focused on 4 precedent transactions from 2008 forward, including the Ciba and Hercules transactions, along with the Styron and Morton acquisitions. 77 If the Ciba and Hercules transactions, with multiples of 7.8x and 9.0x respectively, had been included in the August 29 analysis, the average non-pension adjusted multiple since 2008 would have been 7.6x — higher than the average non-pension adjusted post-Lehman EBITDA multiple of 6.8x calculated in the Lazard Expert Report 78 UBS contended that this was a methodology flaw, tending to drive Lazard’s TEV computation down — or, more to the point, which if absent would have caused Lazard TEV computation now to be higher.

C. Valuation Conclusions

If I were required to find a specific valuation for the Chemtura Debtors here, I think that, based on the foregoing and the additional factual analysis discussed below, any valuation would be at the low end of the Lazard range. 79 But for the purposes of this controversy, I don’t need to find an exact valuation. To determine that the Plan does not violate section 1129(b)’s “fair and equitable” requirement by paying creditors more than in full, I need only find that the Debtors’ TEV doesn’t exceed the TEV underlying the Settlement.

For the reasons set forth below, I so find. I do so for the following reasons.

i. Methodology

As previously indicated, Lazard’s valuation presented a TEV in the range of from $1.9 to $2.2 billion, with a midpoint of $2.05 billion. The Settlement was based on that midpoint valuation. Lazard’s valuation conclusion was reached after consideration of three traditional methods — value implied by consideration of: (1) discounted cash flow (2) comparable companies; and (3) prices in precedent comparable transactions.

The UBS valuation, by contrast, presented a TEV in the range of from $2.3 to $2.6 billion, with a midpoint at $2.45 billion, approximately 20% higher than the Lazard valuation. But the UBS valuation was reached by computation only of DCF, which, as discussed below, is subject to projections under an aggressive LRP in an uncertain economic environment. In such an environment, I think that Precedent Transactions (if in that same environment and if the sample size wasn’t too small) and, especially, Comparable Companies, *580 would provide a more persuasive indicator of value, and I was surprised that these latter two techniques did not play a greater role in the UBS analysis. Comparable Companies and Precedent Transactions analyses were employed, but not to reach separate valuations that would then be considered to provide a composite or blended valuation. Instead, they were used only as a species of check — sometimes referred to as a “sanity check” — on the valuation UBS arrived at by its use of DCF.

Although in holding valuation hearings before, I’ve seen experts come to valuation conclusions using several different methodologies, and then come to various weighted averages for the final valuation, 80 that was not done here. Instead, Lazard prepared the “football field” chart, described above and pictured below, reflecting the general overlap in valuation ranges derived from its various methodologies, and then submitted an essentially subjective valuation consistent, for the most part, 81 with the overlap.

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While Lazard developed a valuation range using individual valuations derived from several different methodologies, UBS did not do so. UBS computed valuations like Lazard’s only by DCF. The Creditors’ Committee noted this in its briefing on this motion. 82 Though I wouldn’t express the *581 thought in quite the way that the Creditors’ Committee did, I agree with the Creditors’ Committee’s underlying point: the difference in technique makes the La-zard analysis superior.

ii. DCF Analysis

As previously mentioned, the DCF valuations by each of Lazard and UBS were for the most part predicated on the cash flows anticipated in management’s LRP, which was unchallenged by UBS or the Equity Committee. 83 The LRP assumed that a general macroeconomic recovery to pre-recessionary levels would occur in 2011, which would result in further earnings improvements through 2014. It projected EBITDAR of $528 million in 2014, after five years of increasing EBITDA, without any drops, or even flatness, each year.

The Debtors’ CFO, whom I found competent and credible, described the Long Range Plan as “aggressive,” 84 and I so find. The Long Range Plan called for levels of performance, for years after 2011, that had never before been achieved at Chemtura. 85 And it was prepared in the context of an economy that, while certainly improved since 2008 (when the U.S. nearly faced a depression), is improving only slowly. The Equity Committee’s expert conceded that UBS has lowered its GDP forecasts for 2010 and 2011. 86 I don’t have any greater ability than the political and economic pundits to predict how quickly the economy will improve, and I don’t think that I should do so. But I can and do find that since the Debtors’ Long Range Plan is already aggressive, and since the speed (and in the views of some, the fact) of the economic recovery is uncertain, it is inappropriate to be as confident as the Equity Committee is as to future growth in the American economy and increasing Chemtura EBITDA growth.

The Lazard and UBS DCF analyses both assume continuously increasing growth, but the effect of that assumption is magnified in the UBS analysis, which uses the $528 million EBITDAR in the last year, 2014, as the basis for determining terminal value. I take it as true, as the Equity Committee and UBS contended, that, for the terminal value calculations, using the cash flows in the last projected year is not just common, but the more traditional approach (at least before considering the cyclicality of the company’s business). But that reality underscores the importance of the projections that get us the $528 million in expected EBITDAR for that last year. The extent to which that $528 million is an appropriate benchmark for gauging future performance (and *582 hence terminal value) depends upon both the confidence that one has in expectations as to the Debtors’ future economic growth as well as the extent to which the expectations would be subject to cyclical variations.

I’ve previously noted that the Debtors’ projections are aggressive, and that I have uncertainty as to the country’s — apart from Chemtura’s — economic prospects over the next five years. This uncertainty cuts materially in favor of the Lazard view, which doesn’t place as much reliance on the unprecedented EBITDA for 2014.

However, I agree with Lazard only in part with respect to how to deal with cyclicality. Determining the appropriate Terminal Value may be a challenge in cyclical businesses, as the projected period might end at various points near the top, bottom, or middle of the business cycle, and using the cash flows at that point might or might not provide a reasonable basis for projected cash flows going forward. I didn’t understand anyone in this case to question the view of NYU business professor Aswath Damodaran that for cyclical businesses, taking the business cycle into account makes for a better analysis — that “trying to forecast the next cycle is not only futile but dangerous[,] and that it is far better to normalize earnings and cash flows across the