According to the U.S. Bankruptcy Court docket, Molycorp’s ad hoc 10% noteholders and official committee of unsecured creditors filed separate objections to the Debtors’ Disclosure Statement.
The ad hoc 10% noteholders assert, “The Disclosure Statement itself presents at least two compelling reasons why the Debtors are not capably seeking to maximize value for the benefit of all stakeholders in filing the Oaktree Plan, and now persisting to pursue it. First, the so-called ‘9019 Settlement’ that the Debtors admit is ‘integral’ to the Oaktree Plan offers victory on all fronts to Oaktree in exchange for absolutely nothing. Even if the ‘Accepting GUC Distribution’ had concrete value that could conceivably be discerned by creditors – and it does not – the Disclosure Statement admits that such ‘gift’ from Oaktree would evaporate in the face a single plan objection from any constituency….Second, the Oaktree Plan is rigged to self-destruct, if any of the Committee’s objections, defenses, and counterclaims against Oaktree succeed….The inescapable conclusion is that the Debtors performed no analysis of potential claims against Oaktree and attempted no serious negotiations before deciding to simply hand over everything to Oaktree.” The ad hoc 10% noteholders and the official committee of unsecured creditors also filed separate sealed objections to Molycorp’s motion for an order approving bidding procedures for the sale of the Debtors’ assets and approving certain bidder incentives in connection with its entry into a stalking horse agreement. The official committee of unsecured creditors argues, “The Court should deny the Bidding Procedures Motion. The Debtors’ Joint Plan of Reorganization ostensibly provides for separate paths out of chapter 11, through either (i) a sale of substantially all of the Debtors’ assets or (ii) a sale of Molycorp Minerals and a transfer of equity of the remaining businesses to Oaktree. The Bidding Procedures are deficient in a number of respects, including, but not limited to, the following.”
The objection continues, “The Bidding Procedures improperly allow Oaktree to credit bid, even though the so-called Stand-Alone Reorganization scenario is a de facto credit bid….The consent and consultation rights for the Committee in the Bidding Procedures are inadequate; and Oaktree and the 10% noteholders should not be eligible to receive bidder incentives….Additionally, approval of the Bidding Procedures Motion at this time is premature. The Court is faced with competing pending motions that could result in the termination of the exclusive periods for the Debtors to file a plan and solicit acceptances thereof and permission for the Committee to file and pursue confirmation of its own, competing plan….The bidding procedures provide that, unless Oaktree’s claims are paid in full, Oaktree will receive the stock of the entire company other than Molycorp Minerals. If the bids received are less than the entire amount contemplated by the Entire Company Sale Trigger, then Oaktree effectively is able bid its claims and take the equity of the Molycorp businesses in the so-called Stand-Alone Reorganization. That outcome is no different than if Oaktree were explicitly deemed to be a bidder and allowed to use its claims as currency, except that neither the Debtors nor Oaktree have set forth any basis to demonstrate that Oaktree has the right to credit bid.”
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