If we needed a local example to show the effects of the worldwide credit crunch, Solutia provided it this morning. The chemical company was scheduled to emerge from bankruptcy this week, but it says that exit will be delayed because its financing isn’t in place. Its banks are blaming “conditions in the credit markets”:

The lead arrangers of Solutia’s exit financing — Citigroup Global Markets Inc. and certain of its affiliates, Goldman Sachs Credit Partners L.P., Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. — informed Solutia yesterday that, in their view, due to continuing conditions in the credit markets, they have not been able to complete the exit financing they committed to on October 25, 2007.

The banks are contending that market turmoil amounts to an “adverse change … that …  materially impairs syndication of the proposed loan facilities.” Solutia is contending that market conditions haven’t changed all that much since October, when the loan agreement was signed. It will be an interesting fight. But it will make a four-year-old bankruptcy case last even longer.