The U.S. Trustee assigned to the GenOn Energy case filed with the U.S. Bankruptcy Court an objection to the Company’s global settlement.
The Trustee asserts, “The United States Trustee appreciates the desire of the GAG Noteholders to be compensated for any delay and does not object to the increase in payout to the GAG Noteholders under the plan of reorganization in this case related to any delay. The proposed order, however, provides that the GAG Noteholders will receive an administrative expense claim in the amount of their proposed plan treatment, irrespective of whether the Plan is confirmed. Thus, if the proposed order were entered before confirmation of a plan, this compromise would elevate one group of unsecured creditors (the GAG Noteholders) to administrative status while leaving other unsecured creditors (the general unsecured creditors) in their current status.”
In addition, “The Debtors might pay one group of unsecured creditors before confirmation, while another group of unsecured creditors remains unpaid. If the case were never confirmed and converted to chapter 7, the GAG Noteholders would be in a better position than the general unsecured creditors. The Debtors have not cited any authority for converting a class of unsecured creditors to administrative status prior to confirmation.”
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