NII Capital 2021 noteholders seek role in Chapter 11 plan negotiations

By Caroline Salls

Pittsburgh, March 13 – An informal group of NII Capital Corp. 2021 noteholders asked the U.S. Bankruptcy Court for the Southern District of New York to order the NII Holdings, Inc. debtors to participate in mediation, according to a Friday court filing.

“The debtors have now filed two successive plan support agreements, each of which have been structured to reallocate value of the debtors’ estates to a few preferred creditors in violation of the requirements of Bankruptcy Code, and in what amounts to the equitable subordination of the 7.625% senior notes issued by NII Capital Corp., the motion said.

The noteholder group said each of the plan support agreements “was constructed without any input from holders of a substantial amount of the 2021 CapCo notes,” who, unlike the holders who negotiated these agreements with the debtors, do not hold the other series of CapCo notes.

The 2021 noteholders said the holders of the other series of CapCo notes are slated to receive significantly larger distributions than the 2021 CapCo noteholders, despite the fact that the CapCo notes are contractually and structurally equal.

According to the motion, the NII debtors and their preferred creditors “rebuffed the movant’s multiple requests to be included in plan negotiations.”

“The proposed plan favors those creditors the debtors included in negotiations under the guise of a purported settlement at the expense of those they excluded from negotiations,” the motion said.

“The basis for the purported settlement – the transferred guarantor claims – is a flimsy straw man.”

In a hypothetical Chapter 7 liquidation, the noteholder group said the transferred guarantor claims “would be litigated, proven meritless and accorded no value,” resulting in “equal distributions to claims of equal dignity – a fundamental right for creditors that each plan proposed by the debtors has failed to honor.”

The noteholder group has requested expedited consideration of the motion on March 23. If that is not granted, a hearing will be held on April 15.

NII Holdings is a Reston, Va.-based provider of Nextel cellular service that filed for bankruptcy on Sept. 15, 2014 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 14-12611.

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