The U.S. Trustee assigned to the Exide Technologies case filed with the U.S. Bankruptcy Court a response to the request for an official committee of equity security holders. The Trustee explains, “Equity committees should not be appointed unless equity holders establish that (i) there is a substantial likelihood that they will receive a meaningful distribution in the case under a strict application of the absolute priority rule, and (ii) they are unable to represent their interests adequately without an official committee….Movants assert that there is as much as $600 million of equity value in the Debtor, but have not yet offered admissible evidence to support such a valuation….It is not enough for the Movants to state their conclusion that the Debtor has positive equity value; they must produce evidence demonstrating a substantial likelihood of a meaningful distribution to equity holders after payment in full of all pre-petition and post-petition creditors. Absent the requisite evidentiary showing, the estate should not be burdened with the substantial cost of an equity committee….The Movants have the initial burden of developing a factual record to demonstrate that the interests of equity holders are not adequately represented. They have not met that burden….The Movants have not shown that the interests of the board of directors and of management are not aligned with the interests of shareholders. They have failed to demonstrate that equity is likely to receive a meaningful distribution in this case, and they have failed to demonstrate that shareholder interests are not adequately represented. Accordingly, the Motions should be denied.”
About Brandy Chetsas
Brandy L. Chetsas is editor in chief at Bankrupt Company News. She joined New Generation Research, Inc. in 1998. As Director of Strategic Content, she leverages 20+ years of communications and project management experience for the distressed investing sector–with particular expertise on corporate restructurings via Chapter 11. Brandy began her career writing for a law enforcement-related publication and teaching English courses at numerous colleges in the U.S. and abroad.