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Bankruptcy Keyed to Levitan, 3rd Ed.
Ad Hoc Committee of Non-Consenting Creditors v. Peabody Energy Corp. (In re Peabody Energy Corp.)
Citation:
933 F.3d 918 (2019)Facts
In April 2016, Peabody Energy Corporation and its affiliates filed for Chapter 11 bankruptcy protection due to declining revenues in the coal industry and substantial debt obligations. A dispute arose between secured and senior-unsecured creditors regarding the extent of collateral securing the creditors’ debts. Through mediation, the Debtors and a group of seven creditors (the “Noteholder Co-Proponents”) negotiated a complex reorganization plan. The plan included a $750 million Rights Offering allowing certain creditors to purchase common stock at a 45% discount and a $750 million Private Placement allowing qualifying creditors to purchase preferred stock at a 35% discount. To qualify for the Private Placement, creditors had to sign agreements committing them to purchase stock, backstop the Rights Offering, and support the plan throughout the confirmation process. The plan established a three-phase system determining who could participate in the Private Placement and in what amounts. Qualifying creditors received premiums for their commitments. The Ad Hoc Committee chose not to sign the agreements and instead proposed alternative plans, which the Debtors considered but rejected. The bankruptcy court confirmed the Debtors’ plan, which was approved by all twenty classes of creditors with approximately 95% of unsecured creditors agreeing to participate in the Private Placement.
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