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Examiner's Report in re Dynegy Holdings

Examiner's Report in re Dynegy Holdings

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EDACTED
V
ERSION
1
 UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK 
------------------------------------------------------------------------x
In re: : Chapter 11: Case No. 11-38111 (CGM)DYNEGY HOLDINGS, LLC, et al., : Jointly Administered:Debtors. :
------------------------------------------------------------------------x
REPORT OF SUSHEEL KIRPALANI, EXAMINER Q
UINN
E
MANUEL
U
RQUHART
&
 
S
ULLIVAN
,
 
LLP
 
51 Madison Avenue, 22nd Floor  New York, New York 10010865 South Figueroa Street, 10th Floor Los Angeles, California 9001750 California Street, 22nd Floor San Francisco, California 94111
 
Counsel to Examiner 
March 9, 2012
1
Filed under seal pursuant to the Order Granting the Motion of U.S. Bank NationalAssociation, as Indenture Trustee, for Appointment of an Examiner Pursuant to Section1104(c) of the Bankruptcy Code [Docket No. 276].
11-38111-cgm Doc 490 Filed 03/09/12 Entered 03/09/12 11:51:40 Main DocumentPg 1 of 173
 
 
TABLE OF CONTENTS
Page
I.
EXECUTIVE SUMMARY OF THE EXAMINER’S CONCLUSIONS ....................................1
A.
E
XAMINER 
A
PPOINTMENT
A
 ND
M
ANDATE
...............................................................1
B.
S
UMMARY
O
F
F
INDINGS
A
 ND
C
ONCLUSIONS
...........................................................1
C.
B
ASES
F
OR 
F
INDINGS
A
 ND
C
ONCLUSIONS
................................................................5
1.
P
OTENTIAL
A
CTUAL
A
 ND
C
ONSTRUCTIVE
F
RAUDULENT
T
RANSFERS
..........5
2.
C
ONDUCT
O
F
D
EBTORS
I
 N
C
ONNECTION
W
ITH
P
REPETITION
ESTRUCTURING
...........................................................................................8
3.
W
HETHER 
D
YNEGY
H
OLDINGS
I
S
C
APABLE
O
F
C
ONFIRMING
A
 
C
HAPTER 
11
 
P
LAN
......................................................................................10
II.
PROCEDURAL BACKGROUND...........................................................................................11
A.
C
OMMENCEMENT
O
F
C
HAPTER 
11
 
C
ASES
..............................................................11
B.
E
XAMINER 
M
OTION
,
 
O
RDER 
,
AND
A
PPOINTMENT
...................................................11
C.
E
XAMINER 
S
W
ORK 
P
LAN
......................................................................................13
D.
T
OPICS
E
XCLUDED
F
ROM
T
HIS
EPORT
..................................................................14
E.
ETENTION
O
F
P
ROFESSIONALS
.............................................................................15
F.
ULE
2004
 
M
OTION
A
 ND
EQUEST
F
OR 
P
RIVILEGED
D
OCUMENTS
.......................16
G.
D
ISCOVERY
C
ONDUCTED
I
 N
F
URTHERANCE
O
F
I
 NVESTIGATION
............................17
H.
M
EDIATION
.............................................................................................................18
I.
C
ONFIDENTIALITY
I
SSUES
ELATING
T
O
EPORT
P
REPARATION
............................19
III.
RELEVANT FACTUAL BACKGROUND AND FINDINGS ..............................................19
A.
D
YNEGY
O
PERATIONAL
H
ISTORY
A
 ND
B
USINESS
L
INES
........................................19
B.
P
RE
-R 
ESTRUCTURING
C
APITAL
S
TRUCTURE
A
 ND
S
IGNIFICANT
I
 NDEBTEDNESS
........................................................................................................21
1.
D
YNEGY
I
 NC
. ..............................................................................................21
2.
D
YNEGY
H
OLDINGS
....................................................................................22
11-38111-cgm Doc 490 Filed 03/09/12 Entered 03/09/12 11:51:40 Main DocumentPg 2 of 173
 
 
ii
 
C.
T
HE
B
LACKSTONE
A
 ND
I
CAHN
A
TTEMPTS
T
O
A
CQUIRE
D
YNEGY
I
 NC
. ..................26
D.
B
OARDS OF
D
IRECTORS OF
D
YNEGY
I
 NC
.
AND
D
YNEGY HOLDINGS
........................27
E.
 N
EW
M
ANAGEMENT
T
EAM
J
OINS
D
YNEGY
.............................................................30
F.
D
YNEGY
D
ECIDES
T
O
P
URSUE
P
REPETITION
ESTRUCTURING
...............................32
1.
A
RCHITECTS
O
F
ESTRUCTURING
..............................................................32
2.
I
MPENDING
D
EFAULT
U
 NDER 
O
LD
C
REDIT
F
ACILITY
.................................33
3.
I
 NITIAL
O
UTLINE
O
F
ESTRUCTURING
I
 NITIATIVES
....................................33
4.
ETENTION
O
F
ESTRUCTURING
A
DVISORS
...............................................35
G.
EFINEMENT
O
F
ESTRUCTURING
P
LAN
................................................................39
1.
P
RELIMINARY
A
CTION
P
LANS
.....................................................................39
2.
D
YNEGY
I
 NC
.
 
B
OARD
O
F
D
IRECTORS
A
 ND
FRC
 
D
ELIBERATIONS
..............42
3.
S
EPARATION OF
C
OAL
C
O
T
RANSFER 
F
ROM THE
A
UGUST
EFINANCING
;
 
O
RIGINS OF
U
 NDERTAKING
.................................................48
4.
D
YNEGY
A
 NNOUNCES
I
 NTENT
T
O
P
URSUE
P
REPETITION
ESTRUCTURING
O
 N
J
ULY
10,
 
2011 ...........................................................49
5.
C
REATION
O
F
D
YNEGY
G
AS
I
 NVESTMENTS
O
 N
A
UGUST
1,
 
2011 ...............50
6.
A
UGUST
4,
 
2011
 
D
YNEGY
I
 NC
.
 
B
OARD
M
EETING
.......................................53
7.
L
ACK 
O
F
D
ELIBERATIONS
B
Y
D
YNEGY
H
OLDINGS
....................................53
H.
P
HASE
1:
 
ING
-F
ENCE
O
PERATING
A
SSETS AND
EFINANCE
O
LD
C
REDIT
F
ACILITY
.................................................................................................................54
1.
S
ELECTION
O
F
L
EAD
A
RRANGERS
..............................................................54
2.
I
MPORTANCE OF
V
ALUE OF
C
OAL
C
O
..........................................................55
3.
L
OAN
S
YNDICATION
E
FFORTS
A
 ND
L
ENDER 
EACTIONS
...........................56
4.
S
OLVENCY
EPRESENTATIONS
...................................................................58
5.
S
PECIFIC
S
TEPS
I
 N
ING
-F
ENCING
T
RANSACTION
......................................59
6.
S
OURCES
A
 ND
U
SES
O
F
A
UGUST
EFINANCING
.........................................68
11-38111-cgm Doc 490 Filed 03/09/12 Entered 03/09/12 11:51:40 Main DocumentPg 3 of 173

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