March 16, 2012 / 11:24 AM / 7 years ago

Dynegy disappointed with examiner's report

(Reuters) - Dynegy Inc DYN.N said it was “disappointed” by a court-appointed examiner’s report that alleged of fraudulent practices by the company before its unit filed for bankruptcy.

Last week, in a scathing report, the examiner said Dynegy Inc harmed creditors by fraudulently transferring some coal-powered plant assets to itself before putting a unit into bankruptcy, and urged that the transfer be reversed.

In a filing early on Friday, the company said the report was not the conclusion of any court.

Dynegy added that the examiner improperly assumes insolvency of Dynegy Holdings at the time of the transactions and has ignored critical evidence to the contrary.

The examiner, Susheel Kirpalani, had issued his report on the events leading to the bankruptcy of the independent power producer’s Dynegy Holdings LLC unit.

Dynegy Inc said the examiner’s conclusion of a fraudulent transfer is incorrect and that documents and evidence show that there was “no intent to hinder or delay creditors” in the transfer of assets.

“The company ... remains committed to working with all creditor groups to reach a consensual restructuring agreement that is beneficial to all stakeholders,” Dynegy Inc said.

Earlier this week, the U.S. government had asked that an outside trustee take over Dynegy Holdings’ bankruptcy proceedings.

In her petition, U.S. Trustee Tracy Hope Davis said, “Current management is not in a position to assess the findings and conclusion of the examiner, and to pursue any and all of the appropriate remedies. Only a Chapter 11 trustee will have the statutory authority to do so.

Dynegy Holdings filed for bankruptcy in November to restructure expensive leases on power plants and lighten its debt load.

The move essentially turned the bankruptcy process on its head, allowing the equity holders in Dynegy Inc, which include investor Carl Icahn and Seneca Capital, to have rights to the assets while the creditors were dealt heavy losses.

The case is In re: Dynegy Holdings LLC et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-38111.

Reporting by Tanya Agrawal in Bangalore; Editing by Saumyadeb Chakrabarty

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