2012 Year In Review - Part 1

From the Supreme Court weighing in on a chapter 11 case to Bankruptcy Court opinions that may profoundly impact venue selection, many important bankruptcy developments occurred in Restructuring Review's inaugural year. Below is Part I in our first annual year-end list of the most significant decisions and developments in 2012. Part II will be posted shortly. This list is presented chronologically. We'd love to hear your feedback as to what you think are the most important events of the year.

We appreciate you visiting Restructuring Review this year and look forward to providing you with frequent insight and analysis in 2013.

Best wishes for a happy and healthy holiday season.

March 9, 2012: Publication of Dynegy Examiner's Report

On March 9, 2012, Susheel Kirplani, the Court-appointed examiner in Dynegy Holdings, LLC's bankruptcy case, issued a report setting forth his findings and conclusions concerning potential claims and causes of action arising from Dynegy Holdings' pre-bankruptcy restructuring. Among other things, the examiner's report found that Dynegy Holdings, acting at the direction of its parent, Dynegy Inc., transferred its coal assets to Dynegy Inc. with the actual intent to hinder and delay, but not necessarily defraud, Dynegy Holdings' creditors. The report found that the transfer of the coal assets was in exchange for less than reasonably equivalent value, and thus a constructive fraudulent transfer. Additionally, the report found that, assuming Dynegy Holdings was insolvent, its board of directors had breached its fiduciary duties to Dynegy Holdings by approving the transfer. Lastly, the examiner's report cautioned that in light of the conduct of all but one of the members of Dynegy Inc.'s board, four of whom constituted the majority of Dynegy Holdings' board, any bankruptcy plan that provided for those individuals to continue as directors would not be consistent with the interests of creditors and with public policy.

The issuance of the examiner's report had several major effects on Dynegy Holdings' bankruptcy case. Shortly after the report was released, the Bankruptcy Court asked that the examiner serve as mediator over Dynegy Holdings' plan negotiations and ensure that Dynegy Holdings had an independent principal that participated in the negotiations. Ultimately, as a result of the examiner's report, Dynegy Holdings was forced to abandon its original bankruptcy plan that would have restructured Dynegy Holdings' debts...