Multiple Parties–including Fire and Police Retiree Health Care Fund, San Antonio, GAMCO Global Gold, Natural Resources & Income Trust, GAMCO Natural Resources, Gold & Income Trust, Sjunde AP-Fonden, St. Lucie County Fire District Firefighters Pension Trust Fund, Universal Investment Gesellschaf, ConocoPhillips Company and the ad hoc first lien group filed with the U.S. Bankruptcy Court separate objections to Cobalt International Energy’s Disclosure Statement for Second Amended Joint Chapter 11 Plan.
The ad hoc first lien group asserts, “The Disclosure Statement fails to comply with applicable law for at least two reasons — (i) it fails to provide ‘adequate information’ as required by section 1125(a) of the Bankruptcy Code and (ii) the Plan, as proposed, is patently unconfirmable and solicitation of the Plan in its current form is a waste of estate resources (the collateral of the very creditors the Debtors are trying to treat in contravention of the Bankruptcy Code and applicable law). The Disclosure Statement fails to inform voting creditors that the Plan is not reasonably acceptable to the Ad Hoc First Lien Group, thereby creating an immediate and continuing default under the Final Cash Collateral Order. The Debtors are well aware that the proposed treatment of the Class 3 First Lien Notes Claims under the Plan is not reasonably acceptable to the Ad Hoc First Lien Group. The Ad Hoc First Lien Group has always tried to work productively with the Debtors, but will not sit idly by and accept a chapter 11 plan imposed upon them that proposes to treat the First Lien Notes Claims in a manner inconsistent with the First Lien Indenture and that is intended to ‘materially reduce’ recoveries the First Lien Noteholders are entitled to receive as a matter of law and contract….Moreover, because Class 3 is deemed unimpaired, the Debtors must disclose that the First Lien Notes Claims must be satisfied in full in cash and in accordance with section 1124(1) of the Bankruptcy Code if reinstatement fails under section 1124(2).
In addition to the information deficiencies, the Court should deny approval of the Disclosure Statement Motion because the Debtors’ proposed treatment of the Class 3 First Lien Notes Claims renders the Plan patently unconfirmable on its face. If the Debtors believe they can satisfy section 1124(2), they should provide evidence demonstrating as much at any hearing to consider approval of the Disclosure Statement Motion to avoid wasting estate resources (including the First Lien Noteholders’ cash) on a fatally flawed chapter 11 plan. Thus, the Disclosure Statement Motion should be denied.”
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