Jan 17 Elpida Memory Inc won court
approval for technology deals over the objections of U.S.
bondholders, who argued the agreements were an attempt to bind
the bankrupt chipmaker to a proposed $2.5 billion sale to Micron
A U.S. Bankruptcy Court judge in Delaware found no evidence
of collusion or improper motives Thursday in Elpida's technology
licensing deals with Micron and a $15 million patent sale to
U.S. bondholders opposed the deals because they said they
would effectively tie Elpida to its proposed sale and were
unfairly beneficial to Micron.
"The bondholders do not cite any facts to contest the proof
that these agreements confer substantial benefits on Elpida's
estate," Judge Christopher Sontchi said in his 43-page opinion.
Elpida said it would be able to immediately begin improving
its operations thanks to the licensing agreements with Micron.
Elpida's lawyers have described the objections to the technology
agreements as attacks on the Micron deal itself.
The bondholders, led by hedge funds Linden Advisors, Owl
Creek Asset Management and Taconic Capital Advisors, have argued
Elpida is worth nearly $4 billion. They have attacked the Micron
sale as a sweetheart deal negotiated in secret in Japan, where
Elpida's main bankruptcy is taking place.
Elpida filed for bankruptcy protection from creditors with
a Tokyo court in February and asked the Delaware Bankruptcy
Court to protect its U.S. assets soon after.
The bondholders presented their own plan for reorganizing
Elpida to the Tokyo court. However, the court accepted Elpida's
plan for the sale and the bondholders have shifted their fight
against the deal to the U.S. Bankruptcy Court in Delaware.
Creditors are currently considering the plan to sell the
company and have until the end of February to vote on it. Elpida
would also need approval from the Delaware court.
The bondholders have complained about the lack of access to
the Tokyo court and to information about Elpida in general.
Sontchi noted in a footnote in his opinion that "there has been
a troubling lack of transparency in this case."
He blamed that partly on differences in U.S. and Japanese
law but also on Elpida's representatives who "had to be dragged
kicking and screaming into court even though they ultimately
were seeking the court's approval of these transactions."
Elpida, Japan's last maker of dynamic random access memory
(DRAM) chips, was undercut by falling chip sales and foreign
Boise, Idaho-based Micron, which is losing money due to a
crumbling PC industry, hopes the Elpida deal will create larger
economies of scale.
The deal would catapult Micron into the No. 2 spot in the
global market for DRAM chips, behind Samsung Electronics
Micron's shares rose 8 cents or about 1 percent in early
Thursday trading on Nasdaq to $7.75. The stock has rise about 43
percent since the Tokyo court approved the sale in early
The case is In re: Elpida Memory Inc, U.S. Bankruptcy Court
for the District of Delaware, No. 12-10947