Bond Safeguard Insurance, Lexon Insurance (BSG, Lexon) and, separately, Macquarie Corporate and Asset Funding filed with the U.S. Bankruptcy Court objections to Armstrong Energy’s Disclosure Statement related to the Company’s First Amended Joint Chapter 11 Plan.
BSG, Lexon’s objection asserts, “Lexon has executed approximately 105 surety bonds on behalf of the Debtors, as Principal, totalling approximately $33 million (the ‘Lexon Bonds’)….The negotiations are ongoing and Lexon believes all issues will be resolved prior to the hearing on the approval of the Disclosure Statement. However, Lexon is filing this Objection out of an abundance of caution to make the Court and other interested parties aware of its concerns and to submit Lexon’s proposed language that would resolve its issues with respect to the Disclosure Statement.”
In addition, “In sum, maintaining the Lexon Bonds is essential for the Debtors in order to continue to operate their business as Debtors-in-Possession. Any disruption to the Surety Bond Program could severely disrupt the Debtors’ operations to the detriment of not only the Debtors, but other creditors as well. As a result, the importance of the Lexon Bonds to the Debtors cannot be understated….In particular, the Disclosure Statement and Transaction Agreement do not: (a) identify exactly what assets are being acquired by NewCo and what assets are being left behind in the estate, if any; and (b) directly address the treatment of the Lexon Bonds.”
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