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Peabody's adversary creditors to appeal bankruptcy exit approval
March 23, 2017 / 6:34 PM / in 9 months

Peabody's adversary creditors to appeal bankruptcy exit approval

CHICAGO (Reuters) - Rebel creditors of Peabody Energy Corp’s BTUUQ.PK reorganization plan have said they intend to appeal a bankruptcy judge’s decision to allow the world’s largest private sector coal producer to exit Chapter 11 protection.

Peabody's St. Louis headquarters seen from the steps of the Thomas F. Eagleton U.S. Courthouse, where hearings on the coal producer's plan to exit its Chapter 11 bankruptcy began in St. Louis, Missouri, U.S., March 16, 2017. REUTERS/Tracy Rucinski

U.S. Bankruptcy Judge Barry Schermer in St. Louis approved last week a plan by Peabody, which has valuable coal assets both in the United States and Australia, to emerge from bankruptcy in early April with about $2 billion of debt.

In a notice of appeal filed with the Bankruptcy Court in St. Louis, about a dozen money managers who voted against the plan asked an appellate court to review six issues decided by Schermer in approving Peabody’s reorganization.

Their complaints mostly center around the terms of a private stock sale that formed part of Peabody’s plan to slash more than $5 billion of debt and exit bankruptcy. To participate in the private offering, Peabody required creditors to support the reorganization plan. The objecting creditors have said this “premature” buy-in violated the U.S. bankruptcy code.

In an e-mailed statement, Peabody said its reorganization plan had received a creditor approval rate of 93 percent and that it did not expect this appeal to derail its plans to emerge from Chapter 11.

“The bar for appeals in these types of cases is typically very high. Absent a court-ordered stay, we continue to expect to emerge in early April,” Peabody said.

A group of hedge funds, including Elliott Management and Aurelius Capital Management, is expected to reap hundreds of millions of dollars in gains from Peabody’s $750 million private placement of new shares at a 35 percent discount to the estimated value of its reorganized stock.

Reporting by Tracy Rucinski; Editing by Noeleen Walder and Leslie Adler

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