Molycorp Plan Modification Sought


According to the U.S. Bankruptcy Court docket, Molycorp and its official committee of unsecured creditors filed a joint motion for approval of technical modifications to the Fourth Amended Joint Plan of Reorganization.

The motion states, “Pursuant to the Committee Settlement Agreement, Holders of Claims in Class 5A are entitled to receive a distribution from the Class 5A Insurance Payment ($3 million) and the Class 5A Stand-Alone Distribution (7.5% of the Reorganized Parent Common Equity and $2 million in Cash). As the Debtors and the Committee have continued to work on the technical steps necessary to implement the Plan subsequent to the entry of the Confirmation Order, it has become clear that the Class 5A Stand-Alone Distribution cannot be effectively administered without certain technical modifications to the Plan. The Plan currently provides that each Holder of an Allowed Claim in Class 5A in an amount less than $1,000,000 is deemed to have elected to receive Cash (subject to the Class 5 Cash Out Oversubscription) as its Class 5A Stand-Alone Distribution. The Plan also provides that each Holder of an Allowed Claim in Class 5A in an amount greater than $1,000,000 is deemed to have elected to receive Class 5A Equity as its Class 5A Stand-Alone Distribution.”

The motion continues, “To implement the treatment and distributions provided to Creditors in Class 5A with respect to the Class 5A Stand-Alone Distribution, the Confirmation Order approved a form of Cash Out Notice that, among other things, described how Holders of Convertible Notes Claims and the 10% Notes Claim in Class 5A (collectively, the ‘Notes Claims’) would receive their distribution through DTC’s Automated Tender Offer Program (‘ATOP’). However, it has since become apparent that ATOP cannot be used to effectuate the Plan’s distribution scheme, particularly with regard to deemed elections of Cash or Class 5A Equity, because there is insufficient transparency at DTC and via ATOP to effectively determine the identity of, and Claim amounts held by, beneficial Holders of Notes Claims in Class 5A….Therefore, distributions for Class 5A cannot be effectively administered for Holders of Notes Claims, which represent the overwhelming majority of the Allowed Claims in Class 5A, without the technical modifications to the Plan Documents requested to be made by this Motion (the ‘Modifications’).”

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