Dynegy bankruptcy examiner appointed
(Reuters) - A lawyer involved in several major recent bankruptcies has been named the examiner for the bankruptcy of Dynegy Holdings LLC and will investigate whether the company is treating bondholders fairly.
The appointment of Susheel Kirpalani, chairman of the bankruptcy and restructuring group at Quinn Emanuel Urquhart & Sullivan, was made by the U.S. Trustee's office and disclosed in a filing with the bankruptcy court in Manhattan.
It requires court approval and follows the Chapter 11 filing last November 7 by the holding company for power producer Dynegy Inc, which is trying to restructure more than $4 billion of debt.
This restructuring is unusual because it would cause losses for bondholders, yet protect shareholders such as the Seneca Capital hedge fund and billionaire financier Carl Icahn.
Examiners are appointed for the benefit of creditors, equity investors and the bankruptcy estate. They may investigate allegations such as dishonesty, fraud, incompetence and mismanagement. A finding that management has done something wrong could undermine support for or derail a reorganization.
As examiner, Kirpalani will investigate transactions that took place two months before the bankruptcy filing, in which Dynegy Holdings moved assets related to coal-powered plants to its parent, which did not file for bankruptcy.
U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, who oversees the bankruptcy, said an examiner would have power to issue subpoenas and conduct an "unfettered investigation" into Dynegy Holdings' conduct.
Dynegy spokeswoman Katy Sullivan on Wednesday said the Houston-based company "will be transparent and forthcoming in response to all requests made by the examiner."
She also said the company still hopes to emerge from bankruptcy in the summer, and plans to amend its reorganization plan to reflect negotiations last month with creditors.
LEHMAN, WASHINGTON MUTUAL, AMERICAN HOME
According to his firm biography, Kirpalani's clients have included two lenders that once had large mortgage operations, Washington Mutual Inc and American Home Mortgage Investment Corp .
They have also included the official committee of unsecured creditors of Lehman Brothers Holdings Inc , whose bankruptcy is the largest in U.S. history.
Kirpalani is a 1994 graduate of Fordham University School of Law.
The appointment of an examiner had been sought by US Bank NA, the trustee for financing tied to leases associated with Dynegy Holdings' purchase of the Roseton and Danskammer electric power generating plants in Newburgh, New York.
US Bank, a unit of US Bancorp, claimed Dynegy Holdings' board knew the asset transfers were unfair. It also said the transfers were illegal.
In July 2010, an agreement to help Tribune Co exit bankruptcy collapsed after an examiner identified possible legal claims tied to that publisher's $8.2 billion leveraged buyout.
Dynegy shares closed on Wednesday up 1 cent at $2.65.
The case is In re: Dynegy Holdings LLC et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-38111.
- Moscow fights back after sanctions; battle rages near Ukraine crash site
- Carnage at U.N. school as Israel pounds Gaza Strip |
- U.S. economy bounces back in second quarter |
- EU and U.S. announce new sanctions on Russia over Ukraine |
- Obama says strains over Ukraine not leading to new Cold War with Russia