June 15, 2009
The U.S. Trustee, which oversees bankruptcy cases in New York, has filed an objection to Charter Communications Inc's (CHTRQ.PK) "prepackaged" reorganization plan, saying it improperly releases the company's officers, including Paul Allen, from being sued over the company's collapse.
Diana Adams, U.S. Trustee for the New York region, said in court papers filed June 12 that the cable operator's reorganization plan should not be approved with legal releases that prevent its shareholders from being able to sue the company's directors, advisors, attorneys, employees and others for potential violations of federal and state securities laws that may have caused their losses.
The U.S. Trustee asked U.S. Bankruptcy Judge James Peck to deny approval of the legal releases at a court hearing on the plan in July, unless there is a finding that "truly unusual circumstances render the release terms important to the success of the plan." Adams said in the papers that, at a minimum, the legal releases should not apply to stockholders.
Charter, controlled by Microsoft Corp co-founder Allen, filed for bankruptcy protection in March under the weight of $21.7 billion in debt. It is seeking approval of a "prepackaged" reorganization plan which will reduce its debt load. Under the plan, Allen will receive up to 7 percent of the reorganized company's equity and keep the largest voting interest in the company at 35 percent.
A group of Charter stockholders, who are expected to be wiped out under its bankruptcy plan, are seeking approval of a committee to represent their interests in the case at a court hearing later this week.
A lawyer for Charter was not immediately available to comment on the Trustee's objection.
The case is In re: Charter Communications, Inc., U.S. Bankruptcy Court, Southern District of New York, No. 09-11435.
Source:
Reuters.com
(Reporting by Emily Chasan; Editing by Richard Chang)
The U.S. Trustee, which oversees bankruptcy cases in New York, has filed an objection to Charter Communications Inc's (CHTRQ.PK) "prepackaged" reorganization plan, saying it improperly releases the company's officers, including Paul Allen, from being sued over the company's collapse.
Diana Adams, U.S. Trustee for the New York region, said in court papers filed June 12 that the cable operator's reorganization plan should not be approved with legal releases that prevent its shareholders from being able to sue the company's directors, advisors, attorneys, employees and others for potential violations of federal and state securities laws that may have caused their losses.
The U.S. Trustee asked U.S. Bankruptcy Judge James Peck to deny approval of the legal releases at a court hearing on the plan in July, unless there is a finding that "truly unusual circumstances render the release terms important to the success of the plan." Adams said in the papers that, at a minimum, the legal releases should not apply to stockholders.
Charter, controlled by Microsoft Corp co-founder Allen, filed for bankruptcy protection in March under the weight of $21.7 billion in debt. It is seeking approval of a "prepackaged" reorganization plan which will reduce its debt load. Under the plan, Allen will receive up to 7 percent of the reorganized company's equity and keep the largest voting interest in the company at 35 percent.
A group of Charter stockholders, who are expected to be wiped out under its bankruptcy plan, are seeking approval of a committee to represent their interests in the case at a court hearing later this week.
A lawyer for Charter was not immediately available to comment on the Trustee's objection.
The case is In re: Charter Communications, Inc., U.S. Bankruptcy Court, Southern District of New York, No. 09-11435.
Source:
Reuters.com
(Reporting by Emily Chasan; Editing by Richard Chang)
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