Relevant Document: Agenda
This morning, Judge Stuart Bernstein granted the Avaya debtors’
motion to extend their plan filing and solicitation exclusivity periods to Sept. 16 and Nov. 15, respectively. The judge also addressed the
response filed last Friday by a newly formed
ad hoc second lien group, saying the debtors “have to talk to” the new second lien group going forward.
Additionally, Jon Henes of Kirkland & Ellis for the debtors announced that
the debtors have reached an agreement in principle with the first lien ad hoc group and the Pension Benefit Guaranty Corp., and will be aiming to file an amended plan by next week. Henes also stated that the debtors have not yet engaged in negotiations with the unsecured creditors committee.
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In support of the exclusivity extension, Abid Qureshi of Akin Gump for the first lien group argued that a “tremendous amount of progress has been made.” Additionally, Lorenzo Marinuzzi of Morrison Foerster for the UCC said that the committee is supportive of the exclusivity extension but that the UCC is not necessarily onboard with the revised plan construct yet.
Additionally, Vincent Indelicato of Proskauer Rose for the new ad hoc second lien group appeared at today’s hearing, requesting that the court condition any further extension of exclusivity on requiring the debtors to negotiate with the new second lien group. Indelicato asserted that the second lien group has been in discussions with the debtors since May and has been rounding up cash for the group’s proposed rights offering and backstop since then. According to Indelicato, the second lien group has been acting with the “express knowledge and blessing” of the other case parties.
Indelicato further asserted that the debtors do not contest that there are many issues the judge would be required to resolve before confirming a plan, including valuation and allocation of assets. According to Indelicato, the debtors would attempt to “run roughshod” over the second liens’ rights by using the “confirmation locomotive” to confirm the plan and a settlement reached with the first liens and PBGC.
Judge Bernstein granted the debtors’ requested exclusivity extension, saying that the debtors have been working their way down the priority chain in negotiating with different groups of creditors, and now will have to talk to the new second lien group. “The debtor will file the plan, and we’ll revisit the issue,” the judge said.
To conclude the hearing, Natasha Hwangpo of Kirkland & Ellis presented the debtors’ first omnibus claims objection, which was largely uncontested. Ryan Dahl, also of Kirkland & Ellis, then presented certain interim fee applications. The judge allowed 80% of fees on an interim basis and 100% of expenses on an interim basis.