NEW YORK (Reuters) – A U.S. judge said on Monday Six Flags Inc (SIXFQ.OB) can keep its exclusive right to file its bankruptcy reorganization plan, overruling objections from a group of noteholders that sought to offer their own plan.
The ruling allows the world’s largest regional theme park operator to begin soliciting votes from creditors on a reorganization plan, crafted by a group of lenders headed by hedge fund Avenue Capital.
Six Flags’ exclusive period for filing a plan was extended until Dec. 10 and it now has from that date to Feb. 8, 2010 to solicit acceptances for the plan.
A group of lenders known as the SFI noteholders, led by Stark Investments, had opposed the plan, saying it undervalued the company. But Judge Christopher Sontchi, of the U.S. bankruptcy court in Delaware, said Six Flags and the Avenue-led group had made “good faith” progress on their restructuring plan.
“The debtors would be prejudiced by the expense, confusion and possible delay in getting the confirmation if the SFI plan is allowed to go forward,” Sontchi said.
Shortly after his ruling, Six Flags’ 8.875 percent bonds due in February 2010 fell by around 1 cent to 21 cents on the dollar, according to Thomson Reuters data.
BATTLE IN BANKRUPTCY COURT
New York-based Six Flags filed for Chapter 11 in June with a $2.4 billion debt load amassed as it bought parks and built rides. In June, Chief Executive Mark Shapiro told Reuters that he hoped the company would exit bankruptcy in six months.
Six Flags’ initial plan gave the majority of the company’s shares to its bank lenders, which sparked an immediate uproar from other creditors.
Avenue offered a new plan, which Six Flags backed in early November. Avenue’s plan provides so-called SFO noteholders owed $420 million with 7 percent of the company.
The Stark group, whose notes are worth $870 million, opposed the Avenue plan, which gave them 4.8 pct of the company.
Sontchi said in his ruling Monday he understood the Stark group’s claims that they had been left out of the running to propose a plan, but said possible delays would hamper Six Flags’ progress in wrenching itself from bankruptcy.
“Chapter 11 cases don’t get better with age,” Sontchi said.
“Ultimately, the debtor cut a deal with the SFO noteholders and wants to go forward,” Sontchi said. “That’s significant progress and indicates good faith.”
But Sontchi said the Stark group could stage a comeback if the debtor’s plan fails to be confirmed.
“If the debtor goes to confirmation and fails … the court might grant termination of exclusivity to get a second bite at the apple,” Sontchi said.
The case is in re: Premier International Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-12019.
By Deepa Seetharaman
(Editing by Matthew Lewis and Steve Orlofsky)