Dynegy Bankruptcy examiner to be appointed

The motion for an examiner was made by U.S. Bank NA, as indenture trustee for the Roseton and Danskammer SLOB bonds. In response, Judge Cecila G. Morris, the bankruptcy judge for the Dynegy case has ordered the appointment of an independent examiner for the bankruptcy of Dynegy Holdings. The examiner will study a series of transactions including a restructuring that took place a few months before the bankruptcy filing. As a result of this restructuring, the valuable coal and natural gas assets were re-organized into bankruptcy remote entities while the HoldCo and Dynegy Northeast were forced to file for bankruptcy.
Bankruptcy examiners are appointed to study allegations of fraud, dishonesty and mismanagement. In this particular case, the charge of fraudulent conveyance is the most pertinent in my opinion. In fact, there is a precedent regarding fraudulent conveyance: in mid-2010, the Tribune Company’s exit from bankruptcy collapsed after a bankruptcy examiner identified fraudulent conveyance in the LBO of Tribune Company. However, this case is not as straight forward: Would Dynegy Holdings have survived without the restructuring and have market conditions worsened since the restructuring? Please email me if you are interested in discussing further.
Discalimer: I have no position in Dynegy and do not plan to initiate one in the next 48 hours.

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Dynegy update

Dynegy, PSEG reached a settlement for $117.5 mm regarding the rejection of the Roseton-Danskammer leases. As per the terms of the settlement, Dynegy will provide an unsecured claim of $110 million and cash of $7.5 mm to a special entity designated by PSEG, Resources Capital Management Corporation, to satisfy certain tax liabilities. In return, PSEG has agreed to a number of stipulations, including support for the bankruptcy plan. Please see the link below for the actual court document. Please email me if you are interested in discussing how this settlement impacts recovery values.
DYN lease rejection bk court 227