Hedge funds holding $250 million in Chesapeake Energy Corp. debt asked a judge to withdraw from litigation between the company and bond trustee Bank of New York Mellon Corp. over redemption of bonds.
The hedge funds, which were allowed to intervene in the matter in Manhattan federal court, asked U.S. District Judge Paul Engelmayer yesterday for permission to withdraw, saying it will reduce the number of parties involved and avoid potentially duplicative filings.
“Trial will be streamlined by having a single defendant, with one set of direct and cross-examinations,” Steven Bierman, an attorney for the group, said in a court filing.
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. Engelmayer gave Chesapeake and BNY Mellon until 5 p.m. tomorrow to object to the the funds’ request.
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.
Investors in the group include Ares Management LLC, Aurelius Capital Management LP, Carlson Capital LP, Monarch Alternative Capital LP, Schoenfeld Asset Management LP, and River Birch Capital LLC.
Bierman, the group’s attorney, didn’t respond to a phone message and e-mail seeking comment. BNY Mellon on March 23 retained his firm, Sidley Austin LLP, to represent the bank in the lawsuit, he said in his court filing.
Richard Ziegler, an attorney for Chesapeake, didn’t return a phone message yesterday seeking comment about the withdrawal request by the investor group.
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).