27164/208/24/2012 21341717.5
LOWENSTEIN SANDLER PC
1251 Avenue of the Americas, 18th FloorNew York, New York 10020(212) 262-6700 (Telephone)(212) 262-7402 (Facsimile)Michael S. Etkin, Esq. (ME 0570)John K. Sherwood, Esq. (JS 2453)and65 Livingston AvenueRoseland, New Jersey 07068(973) 597-2500 (Telephone)(973) 597-2481 (Facsimile)
Bankruptcy Counsel for Lead Plaintiff and the Putative Class
LEVI & KORSINSKY LLP
Nicholas I. Poritt, Esq.1101 30
th
Street, N.W. Suite 115Washington, DC 20007(202) 524-4293
Lead Counsel for Lead Plaintiff and the Putative Class
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
In re:DYNEGY HOLDINGS, LLC,
et al.,
Debtor.Chapter 11Case No. 11-38111 (CGM)In re:DYNEGY, Inc.,Debtor.Chapter 11Case No. 12-36728 (CGM)
LEAD PLAINTIFF’S OBJECTION TO CONFIRMATION OF THE DEBTORS’ JOINTCHAPTER 11 PLAN OF REORGANIZATION UNDER THE BANKRUPTCY CODE
Stephen Lucas, Lead Plaintiff (the “Lead Plaintiff”) in the securities class action entitled
Charles Silsby, individually and on behalf of all others similarly situated v. Carl C. Icahn,
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-2-
Dynegy Inc., Robert C. Flexon, and Clint Freeland,
Case No. 12-cv-02307 (JGK) (the“Securities Litigation”), pending in the United States District Court for the Southern District of New York (the “District Court”), filed on behalf of all persons (the “Putative Class”) whopurchased or otherwise acquired securities of Dynegy, Inc. (“Dynegy” or the “Debtor”)
1
between September 2, 2011 and March 9, 2012, inclusive (the “Class Period”), allegingviolations of Sections 10(b), and Rule 10b-5 promulgated thereunder, and 20(a) of the SecuritiesExchange Act (the “Securities Laws”), by the Debtor and certain current and former officers,directors and shareholders of the Debtor, hereby submits this objection (the “Objection”), on hisown behalf and on behalf of the Putative Class, to Debtor’s
Joint Chapter 11 Plan of Reorganization for Dynegy Holdings, LLC and Dynegy Inc.
[Doc. No. 28, Exhibit 1] (the “Plan”)and states the following:
PRELIMINARY STATEMENT
1.
The non-debtor release and related injunctive provisions in the Plan are nothingmore than a backdoor attempt to sabotage the Securities Litigation now pending before JudgeKoeltl in the District Court. Given the distribution scheme under the Plan, the SecuritiesLitigation is the only source available to the Putative Class to recover their losses based upon theconduct of Dynegy and the beneficiaries of these gratuitous non-debtor releases. A little morethan a month ago, Lead Plaintiff was formally recognized by the District Court as therepresentative of the interests of the Putative Class. In this capacity, Lead Plaintiff will “opt out”of the release provisions contained in the Plan on behalf of himself and all members of thePutative Class. Such an opt-out will have no impact whatsoever on confirmation of the Plan andwill preserve all of the claims of the Putative Class in the Securities Litigation.
1
Capitalized terms shall have the meanings ascribed to them in the Plan or Disclosure Statement unless definedotherwise herein.
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-3-2.
Unfortunately, it may not be that simple (although it should be). Based onpositions taken by the Debtor and certain defendants in the Securities Litigation (all representedby the same law firm), Lead Plaintiff expects that the Debtor will argue that unless a classmember, who may or may not be a current shareholder, has filed an individual opt out election aspart of the Plan solicitation process, he, she or it will be subject to the release and injunctionprovisions contained in the Plan. This is despite the fact that such class members are receivingnothing for their claims, are not entitled to vote, and likely are complete strangers to this chapter11 proceeding. Because this position, if sustained, will have a serious negative impact on theclaims of the Putative Class in the Securities Litigation, Lead Plaintiff must vehemently object toconfirmation in an effort to protect the defrauded class members that he has been charged torepresent.3.
Thus, Lead Plaintiff submits in the first instance that the Bankruptcy Court shouldfind that the opt out election filed by Lead Plaintiff as the official representative of the PutativeClass is effective to preserve the claims of the class (as ultimately determined by the DistrictCourt) against all non-debtor parties, including Dynegy’s directors, officers and shareholders.Alternatively, Lead Plaintiff opposes the non-debtor release and injunction provisions of the Planbecause they are fundamentally inappropriate and unlawful. As set forth in more detail below,the Plan’s non-debtor release provisions are perhaps the most aggressive and unjustified everpresented to a bankruptcy court for approval. Some of the most remarkable features of therelease and injunctive provisions requested by Dynegy are set forth below.
•
The Released Parties are providing no consideration in exchange for thereleases.
•
The granting of the releases is not a necessary condition to confirmation of thePlan or necessary for the reorganization generally. In other words, all of
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