Patriot Coal Corporation (fka PCXCQ)

[marayatano]

Whenever there is a motion for direction of an appoint an equity committee in any case, there always be objections filed that state (or similar):

...the Boards of Directors of the Debtors have fiduciary
duties to the shareholders, even in Chapter 11 cases . . .

. . . Unsecured Creditors Committee has a duty to maximize the value of the Debtors’ estates, which will trickle down to the benefit of the shareholders.

While the above is true as far as fiduciary duty of management, board of directors and Debtors, the problem is once under the umbrella of BK, who is in charge of guarding the hen house?

The problem is: the creditors committee (and/or ad hoc committees) is (are) "usually" made up of hedge funds who want the reorganized entity. Think: wolf guarding the hen house.

Quote below from the Order denying an appointment of an equity committee:

The Debtors’ cases here are a totally different picture. There appears to be no substantial likelihood that equity will receive a meaningful distribution in these cases to justify appointment of a committee. Mr. Christopher Wu’s testimony was speculative, at best, on the
most optimistic outlook imaginable.

The entities could not prove there was any (or enough) equity to warrant an appointment of an equity committee and that Mr. Wu's "testimony was speculative at best and on most optimistic outlook imaginable..."

Not saying equity will or will NOT be thrown a bone, but if you take everything into account (and long this is dragging) and look at the big picture... I would say equity has a slim to none chance of getting any meaningful distribution...

imo