The bankruptcy of Dynegy Holdings LLC should be taken over by a court-approved trustee who will better protect creditors, the U.S. Trustee monitoring the case for the federal government said in court papers.
U.S. Trustee Tracy Hope Davis asked the judge presiding over the case in U.S. Bankruptcy Court in Poughkeepsie, New York, to approve an independent manager to run the energy company.
“The mismanagement of the debtors by their current management to the financial detriment of the debtors’ creditors provides cause for the appointment of an independent fiduciary,” Davis said in a March 11 filing.
Davis cited a court-ordered investigation released last week that found Dynegy Holdings’ sale of coal-fired power plants to its parent, Houston-based Dynegy Inc. (DYN), was a fraudulent transfer and harmed creditors.
Dynegy Holdings filed for bankruptcy in November after bondholders sued the company over the power-plant sale and related reorganization, saying it moved assets out of their reach to benefit shareholders of the parent, including billionaire Carl Icahn.
The case is In re Dynegy Holdings LLC, 11-38111, U.S. Bankruptcy Court, Southern District of New York (Poughkeepsie).
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