Patriot Coal Corporation (fka PCXCQ)

[marayatano]

ORDER DENYING MOTION FOR ENTRY OF AN ORDER DIRECTING THE APPOINTMENT OF AN EQUITY COMMITTEE

http://www.patriotcaseinfo.com/pdflib/3959_51502.pdf

1. The Court has examined the factors that
are to be considered
when considering a
motion under 11 U.S.C. §1102(a)(2). Appointment of
an equity committee is the exception, and
not the rule.
2. The shareholders have no
t shown that an official co
mmittee is necessary for their
interests to be adequately repr
esented. The Boards of Director
s of the Debtors
have fiduciary
duties to the shareholders, even in Chapter 11 case
s, and the Interested Sh
areholders have failed
to show that the Debtors’ Boards and management
will not adequately represent the interests of
equity holders. There is also no basis for c
oncluding that the Unsecured Creditors Committee
(“
Committee
”)
will not adequately represent the shar
eholders, because the Committee has a
duty to maximize the value of the Debtors’ estates, which will trickle down to the benefit of the
shareholders.
3. The Court has specifically considered
In re Pilgrim’s Pride Corp.
, 407 B.R. 211
(Bankr. N.D. Tex. 2009), that was
cited by the shareholders. In th
at case, the debtors filed a
response, neither in support or opposition, to
the motion to appoint a shareholders’ committee.
The Securities and Exchange Com
mission appeared in support of th
e motion to appoint an equity
committee. And while the U.S. Trustee initially
opposed the motion, it then
filed no pleadings in
opposition to the motion. There was also evidence through the debtor’s monthly operating
reports that the debtor was solvent. The debtor’s chief restructuring officer testified that the
debtor’s position “was not even cl
ose to ‘hopeless insolvency’”.
Id.
at 217.
4. The Debtors’ cases here are a totally
different picture. Th
ere appears to be no
substantial likelihood that equity
will receive a meaningful distribut
ion in these ca
ses to justify

appointment of a committee. Mr. Christopher
Wu’s testimony was speculative, at best, on the
most optimistic outlook imaginable.
5.
THEREFORE, IT IS ORDERED THAT
:
The Motion is denied.