Exide convertible holder joins complaint against banks claiming improper conduct

By Carlise Newman

Chicago, Oct. 15 - A big holder of Exide Technologies Inc.'s convertible notes has joined a complaint made by the company's unsecured creditors against its pre-bankruptcy banks alleging that they engaged in improper conduct.

In addition, the company's committee of equity holders opposes confirmation of the reorganization plan, due to the objections of the noteholders, and supports the noteholders' objections.

The complaint by Smith Management LLC, holder of $117 million of Exide's 2.9% convertible senior notes and $3.25 million of its 10% senior notes due 2005, begins with the banks funding of Exide's acquisition of Pacific Dunlop GNB Corp., and ends with what it claims is the manipulation of timing of the company's bankruptcy filing and the designation of which members of the Exide Group would file, to ensure that the banks would benefit from Exide's assets, according to a filing with the bankruptcy court.

The complaint, which was initially filed by the unsecured creditors committee in January, contains 17 alleged causes of action against the banks, including claims of aiding and abetting the breach of fiduciary duties by Exide's board of directors, deepening insolvency, and avoidance of pre- and post-petition transfers under insider provisions of the bankruptcy code.

The banks named are Credit Suisse First Boston; Salomon Smith Barney; AG Capital Funding Partners LP; Top Hat Ltd.; Black Diamond Ltd.; Citadel Trading; and Citadel Equity Fund Ltd.

On Aug. 21, a motion to dismiss the original complaint by the unsecured creditors was heard, and the court said the committee had adequately stated claims. The court also said the complaint sufficiently alleged that the banks had exercised sufficient domination and control over Exide to the point that they constituted "insiders" of the company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.