Multiple Parties–including Wells Fargo Equipment Finance, Wells Fargo Rail Corporation, Wells Fargo Rail Services; F.S. Sperry Corp; Query-Pritchard Construction, Northeast Investors Trust, Western Oilfields Supply d/b/a Rain for Rent; Brahma Group; J.T. Thorpe and Son; Mechanical Supply and Insulating Services–filed with the U.S. Bankruptcy Court separate objections to Horsehead Holding’s confirmation of Second Amended Joint Plan of Reorganization and to its Supplement.
Northeast Investors Trust asserts, “Funds managed by Northeast hold approximately $2.5 million in principal amount of the 10.50% Senior Secured Notes due 2017 issued by Horsehead Holding, which amount represents approximately 1% of the $205 million principal amount of that issuance….The Debtors and the Ad Hoc Committee call this investment opportunity a ‘capital commitment,’ seemingly in an attempt to circumvent the Bankruptcy Code’s requirement that all similarly-situated creditors be afforded the same opportunity to receive the same treatment under the Plan. But, regardless of what they call the transaction or themselves, the Ad Hoc Committee members are receiving under the Plan a valuable investment opportunity that is not afforded to Northeast and other Secured Noteholders that are not part of the Ad Hoc Committee…The Plan violates Bankruptcy Code Section 1123(a)(4), and is therefore un-confirmable, for the same reasons explained in Washington Mutual. There can be no dispute that the opportunity to invest in the Reorganized Debtors through participation in the UPA has ‘inherent value.’….To be sure, the Ad Hoc Committee and the Debtors have not always contemplated excluding minority Secured Noteholders from the opportunity to invest in the Reorganized Debtors. In the Debtors’ now-abandoned Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (the ‘Original Plan’), Eligible Holders were not limited to Ad Hoc Committee members. Instead, Eligible Holders included, among others, all Secured Noteholders. This valuable right to participate in the ‘upside’ of the Reorganized Debtors was inexplicably revoked by the filing of the current Plan. Finally, for the avoidance of doubt, Northeast has not consented in any way to this disparate treatment….Since the filing of the current Plan that limited participation rights to the Ad Hoc Committee, Northeast, on its own and through counsel, has made multiple requests to participate in the UPA. Each of those requests has either been ignored or denied without legitimate justification. Accordingly, under no circumstances has Northeast consented to its inferior treatment under the Plan.”
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