Chesapeake Energy Corp. (CHK) said hedge funds asking to withdraw from its dispute with Bank of New York Mellon Corp. over the redemption of bonds shouldn’t be allowed to pursue any other litigation if they do so.
“Such a condition will avoid the possibility, however remote, of pointless duplication,” Richard Ziegler, an attorney for the company, said in a letter yesterday to U.S. District Judge Paul Engelmayer in Manhattan.
Chesapeake and indenture trustee BNY Mellon are scheduled to face off at trial beginning April 23 over the gas producer’s disputed claim it met a deadline to redeem $1.3 billion in bonds early at par, or 100 cents on the dollar. The hedge funds, which had earlier been allowed to intervene in the case, said March 25 their withdrawal would reduce the number of parties involved.
Chesapeake, the second-biggest natural gas producer in the U.S., issued the early redemption notice on March 15. A week earlier, the Oklahoma City-based company sued BNY Mellon, seeking a court order that it had until that date to issue the notice and avoid making a $400 million “make whole” payment to investors.
The case is Chesapeake Energy Corp. v. Bank of New York Mellon Trust Co., 13-cv-01582, U.S. District Court, Southern District of New York (Manhattan).
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