U.S. court denies Tyco bondholders summary judgment
NEW YORK (Reuters) - A U.S. court denied a group of bondholders a summary judgment against Tyco International Inc (TYC.N) in a dispute over whether the company broke terms of its debt when it restructured into three separate entities last year, according to a court filing.
Tyco last year spun off its electronics and health-care divisions into independent companies. The remaining Tyco International consists of the company's fire and security and engineered products divisions.
The trustee of Tyco's bonds, The Bank of New York, and a group of bondholders took the company to court, arguing that the company did not receive the necessary approval for the spinoffs from bondholders.
Tyco's bondholders argue that they are harmed by the reorganization because the majority of the assets supporting the debt is being transferred to new entities as part of spin offs.
The United States District Court of the Southern District of New York denied bondholders the summary judgment on Monday, according to a court filing.
Typically when a summary judgment is denied a dispute will proceed to a full trial.
The court said that it cannot determine whether the two entities spun off by Tyco constitute "substantially all" of Tyco's assets.
The court also said that the ruling of a previous case, known as Sharon Steel, which also included the transfer of corporate assets, does not apply to Tyco.
Andrew Rosenberg, partner at Paul, Weiss, Rifkind, Wharton & Garrison, which is representing a group of bondholders, and Tyco spokesman Paul Fitzhenry were not available for comment.
(Reporting by Karen Brettell; Editing by Diane Craft)
