According to the Wall Street Journal reports, LyondellBasell Industries AF SCA - the third-largest independent chemical company in the world - has informed lenders about its plan to file for Chapter 11 bankruptcy protection. It has cited plunging sales and a cash crunch as the reasons for considering bankruptcy.

Having already hired a bankruptcy counsel New York law firm Cadwalader, Wickersham & Taft LLP, the privately-held firm is seeking up to $2 billion in bankruptcy financing. The company is also said to have hired Evercore Partners for assistance in the restructuring process.

Last year, LyondellBasell was formed when Dutch chemical company Basell International Holdings bought Houston-based Lyondell Chemical Co. for $12.7 billion. Basell paid $48 a share, a premium of about 20%. The debt burden that resulted from the takeover has been proving too heavy, particularly amid a decline in sales.

In fact, over the past year, LyondellBasell has been embattling with a lot of problems - including high oil and natural gas prices and the weakening economy driving down demand for products. Earlier this month, the company announced that its subsidiary Equistar Chemicals would temporarily idle a chemicals plant, "due to declining market and economic conditions."

In a regulatory filing on Monday, LyondellBasell said lenders had agreed to postpone $160 million in payments from December 19 to December 29. It also added that it was "working collaboratively with lenders" on a still further extension.