Right now, the motion for an official equity committee has been denied. That does not mean that another motion cannot be filed in the future. If I am not mistaken it took three tries for CEMJQ to get an equity committee.
In my mind there is something that the HF's will have in their arsenal, something they may be aiming for. Possibly a replacement of the BOD. It is by far a long shot, but still a distant possibility.
Pursuant to § 362 of the Bankruptcy Code, the filing of a bankruptcy petition invokes the automatic stay, which generally prevents the continuation or commencement of actions against the debtor that were or could have been brought prior to the entity’s filing for bankruptcy, including those actions to obtain possession of or "exercise control" over the debtor’s property. In so doing, the automatic stay affords a debtor entity a breathing spell from the financial and other pressures that drove it into bankruptcy.
Equity holders’ action to replace the board of directors of a corporation arguably is an attempt to exercise control over the assets of a debtor-corporation. Nevertheless, in order to ensure the adequate representation of equity holders in a corporate reorganization, courts have held that the power of an equity holder to vote its shares applies with equal force in bankruptcy proceedings as long as the actions of equity holders does not rise to the level of "clear abuse." Clear abuse requires a showing that equity holders’ actions demonstrate a willingness to risk rehabilitation in order to win a larger share for themselves. That equity holders’ actions are motivated by a desire to seize more bargaining power in the negotiation of a plan of reorganization, however, does not constitute clear abuse, due to the relatively little power that equity holders are given in bankruptcy proceedings.
Don't piss down my back and tell me it's raining!
AI
