A bankruptcy judge said she will allow a Dynegy Inc. (DYN) unit’s creditors to vote on its reorganization plan after some wording changes are made.
U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, said at a hearing today that she will approve Dynegy Holdings LLC’s so-called disclosure statement, allowing the vote. Morris asked lawyers involved in the case to change the wording of an order approving the statement to give creditors more information about the unit’s proposed restructuring.
“I am interested in proper notice and lack of confusion,” Morris said. “I am going to approve it, after all this work.”
The plan will pay bondholders between 59 cents to 89 cents on the dollar, the power producer says. The ruling moves Houston-based Dynegy closer to completing the restructuring of the holdings unit, whose creditors include holders of about $3.4 billion in senior notes. Dynegy put the unit into bankruptcy last year.
Under the proposal, the holdings unit will merge with the parent company, and creditors will own 99 percent of the combined entity. The plan is the result of a settlement reached with creditors following a court-ordered investigation into asset transfers. The Dynegy parent plans to file for bankruptcy to complete the merger, according to court papers.
General unsecured creditors with claims of about $4.2 billion, including noteholders, will receive a recovery of between 59 percent and 89 percent, according to court documents.
The case is In re Dynegy Holdings LLC, 11-38111, U.S. Bankruptcy Court, Southern District of New York (Poughkeepsie).