UPDATE 2-Dynegy Inc files for bankruptcy; will merge with unit
* Icahn, Seneca, Franklin are major Dynegy shareholders
* Dynegy Inc has assets of $11.3 bln, liabilities of $5.1 bln
July 6 (Reuters) - Power producer Dynegy Inc, the parent company of Dynegy Holdings, filed for bankruptcy protection on Friday morning as part of its settlement agreement with creditors and said it will merge with its unit.
Last month, a bankruptcy court approved the company's settlement with creditors under which Dynegy and Dynegy Holdings would be combined, with creditors holding a 99 percent equity stake in the combined company.
The settlement resolved a dispute among creditors over whether Dynegy had acted properly last September in taking $1.25 billion of coal-powered plant assets from Dynegy Holdings.
Creditors of that unit said the transfer unfairly benefited shareholders, including billionaire financier Carl Icahn and the Seneca Capital Investments LP hedge fund and Franklin Resources Inc's Franklin Advisers unit at their expense.
Susheel Kirpalani, a court-appointed examiner, in March called the move a "fraudulent transfer" that harmed Dynegy Holdings.
On Thursday, the court approved the reorganization plan of Dynegy Holdings which clears the way for it to seek approval from creditors.
Dynegy units that operate its coal and gas-fired businesses were not included in Friday's Chapter 11 filing.
The company in 2001 set and then canceled plans to buy Enron Corp as the business and finances of its larger rival deteriorated quickly.
Dynegy had total assets of $11.3 billion and liabilities of $5.1 billion as of May 31.
The cases are In re: Dynegy Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-36728 and Dynegy Holdings LLC et al, No. 11-38111.
- Tweet this
- Share this
- Digg this