According to the U.S. Bankruptcy Court docket, an ad hoc group of NII Capital 2021 Noteholders filed a motion for an order directing NII Holdings to participate in mediation, pursuant to Sections 105(A) and 105(D) of the Bankruptcy Code, Local Bankruptcy Rule 9019-1 and General Order M-452.
The motion explains, “The Debtors have now filed two successive plan support agreements, each of which have been structured to reallocate value of the Debtors’ estates to a few preferred creditors in violation of the requirements of Bankruptcy Code, and in what amounts to the equitable subordination of the 7.625% Senior Notes issued by NII Capital Corp. due in 2021 (the “2021 CapCo Notes”). Each of the Debtors’ plan support agreements was constructed without any input from holders of a substantial amount of the 2021 CapCo Notes, who unlike the holders who negotiated these agreements with the Debtors, do not hold the other series of CapCo Notes.”
The motion continues, “It is these other series of CapCo Notes that receive significantly larger distributions than the 2021 CapCo Notes under the Debtors’ plan proposal. These larger distributions come at the expense of the distributions to the holders of the 2021 CapCo Notes, notwithstanding the fact that CapCo Notes are all contractually and structurally pari passu with one another. The Movant submits that had the Debtors and their preferred creditors accepted rather than rebuffed the Movant’s multiple requests to be included in plan negotiations, this Motion would have been unnecessary. The proposed plan favors those creditors the Debtors included in negotiations under the guise of a purported settlement at the expense of those they excluded from negotiations, the Movant.”
Documents filed with the Court further assert, “The Debtors are holding companies, and as such, a hypothetical chapter 7 liquidation of the Debtors would permit going-concern sales of the Debtors’ equity in their non-debtor subsidiaries that hold valuable businesses. In such hypothetical chapter 7 liquidation, the Transferred Guarantor Claims would be litigated, proven meritless, and accorded no value. The result would be equal distributions to claims of equal dignity – a fundamental right for creditors that each plan proposed by the Debtors has failed to honor. A consensual resolution of these chapter 11 cases is in the best interest of all constituents and may indeed be achievable. It should at least be given a chance, particularly when there is time before a hearing on an as-yet-unfiled disclosure statement.” The Court scheduled an April 15, 2015 hearing on the mediation motion. Read more bankrupt company news.