Shareholders Lose Appeal Of Allied Nevada Ch. 11 Plan
By Martin O'Sullivan
Law360, New York (September 16, 2016, 6:45 PM EDT) -- A Delaware federal judge has tossed an appeal by three shareholders in Allied Nevada Gold Corp. who were seeking to overturn a bankruptcy judge’s approval of the mining company’s Chapter 11 reorganization plan, citing the equitable mootness doctrine.
U.S. District Judge Sue L. Robinson on Thursday dismissed the appeal by a group of three shareholders who were disputing Allied Nevada’s reorganization plan on the grounds that it undervalued debtors, saying that unraveling the current plan would be difficult and would not be fair to the other parties involved in the bankruptcy.
“Appellants' requested relief would detrimentally affect the rights of numerous third parties not before the court,” Judge Robinson said.
The shareholders — Jordan Darga, Brian Tuttle and Stoyan Tachev — were appealing U.S. Bankruptcy Judge Mary F. Walrath’s October 2015 decision to confirm Allied Nevada's Chapter 11 plan, which handed over equity in a reorganized company to unsecured creditors and swappped in new first-lien debt.
Responding to shareholder objections, Judge Walrath at the time said that had the company been liquidated, equity holders would have recovered nothing, while under the Chapter 11 plan, they were at least getting the opportunity to participate in new stock purchases.
The plan swaps allowed unsecured claims into 100 percent equity in a reorganized Allied Nevada subject to dilution, with first-lien secured asset-based lenders exchanging their debt for a new term facility, according to court records.
Allied Nevada filed for Chapter 11 protection in March 2015 with a prearranged restructuring agreement in-hand, citing a cash crunch brought about by a combination of falling prices, an over-leveraged balance sheet, an expensive expansion project and exposure to the Canadian dollar.
The shareholders are representing themselves pro se.
Allied Nevada is represented by Michael D. DeBaecke and Stanley B. Tarr of Blank Rome LLP.
The appeals are Ad Hoc Committee of Shareholders v. Allied Nevada Gold Corp. et al., case number 1:15-cv-00946, and Brian Tuttle v. Allied Nevada Gold Corp. et al., case number 1:15-cv-00949, both in the U.S. District Court for the District of Delaware.
The underlying bankruptcy case is In re: Allied Nevada Gold Corp., case number 1:15-bk-10503, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Kelly Duncan.
