Safe you Finance

Charter Communications Inc.’s plan to reorganize in bankruptcy has "improper" legal releases for Paul Allen, the controlling chairman, and other company officers, said the U.S. Trustee, an arm of the Justice Department.

Diana Adams, acting U.S. Trustee, said in court documents filed Friday that the cable-TV provider’s reorganization plan shouldn’t be confirmed due to legal shields that protect officers and directors, including Allen, from lawsuits for violating state or federal law.

At a minimum, the plan shouldn’t release those parties from lawsuits brought by equity holders, the trustee said.

The "releasees appear to be acting in their own self-interest and seek to use those actions to justify enjoining equity holders, whose rights are extinguished under the plan," Adams wrote.

Under Charter’s proposed reorganization, secured claims will be reinstated and unsecured claims will be paid in full. Interest holders other than Allen, including common stockholders, will get nothing.

The legal releases say "holders of interest," including parties who signed a settlement with Charter, along with officers, directors and financial advisers will be released from lawsuits bad credit payday loans.

Also, U.S. Bankruptcy Judge James Peck in Manhattan has approved the "disclosure statement," or rough outline of how Charter intends to reorganize, and has said various objections, including one from by JPMorgan Chase & Co., will be considered at a confirmation hearing where Peck will be asked to approve or reject the plan.

Charter’s plan had already been amended last month to answer some concerns of the U.S. Trustee, an arm of the Justice Department that oversees bankruptcies.

JPMorgan and other creditors have argued that Charter’s debt can’t be reinstated, or replaced on existing terms, because Allen, Microsoft co-founder and the controlling chairman, cedes control of the company through its reorganization plan.

Town and Country-based Charter filed for bankruptcy protection in late March.

Source