Dynegy sued by creditors over restructuring plan

NEW YORK, July 21 (Reuters) - Dynegy (DYN.N) is being sued by a group of affiliated creditors that contend the independent power producer's recently announced restructuring would siphon off assets related to their debt, and has already cost them millions of dollars.

In a complaint filed Thursday, LibertyView Credit Opportunities Fund and four other funds sharing the LibertyView name asked a New York state court in Manhattan to stop Dynegy from completing the restructuring announced earlier this month.

Dynegy is trying to change the ownership structure for some of its gas and coal power plants and issue new debt. The company launched the restructuring process after failing to sell itself earlier this year. [ID:nN1E76907U]

The company was not immediately available for comment.

In their complaint, the LibertyView funds said "virtually every actual revenue generating asset is being siphoned out ... and deliberately placed beyond the reach of (Dynegy's) creditors."

They also said Dynegy's plan also materially increases the risk the company will default under its debt obligations.

The funds are seeking to have the court order Dynegy to comply with the offering terms of its previously issued debt as it restructures.

The case is LibertyView Credit Opportunities Fund LP et al v. Dynegy Holdings Inc, New York State Supreme Court, New York County, No. 651998/2011. (Reporting by Michael Erman and Jonathan Stempel; Editing by Phil Berlowitz)