Deutsche Bank to block Mirant's proposed plan of reorganization; other creditors also protest

New York, April 12 - Deutsche Bank Securities Inc. said it plans to block acceptance of Mirant Corp.'s proposed plan of reorganization by voting against it.

Deutsche said it has the ability to stop the plan going through because it is the largest unsecured creditor of Mirant Americas, Inc., owning nearly all the third-party unsecured claims.

The disclosure statement for the plan "suffers from many deficiencies," Deutsche said in a filing Monday with the U.S. Bankruptcy Court for the Northern District of Texas.

But it singled out the proposed substantive consolidation for special criticism and as the reason for its intention to vote no.

Without substantive consolidation, creditors of Mirant Americas will receive 100% recovery, Deutsche calculates, using an "informal analysis." That compares with the 60% projected with consolidation.

Deutsche also noted that Mirant has not provided adequate information - as it believes is required by bankruptcy law - to allow creditors to evaluate the various subsidiaries independently.

It added that disclosing the information would also "reveal the key effect of the plan's structure - to enable MAI's [Mirant Americas, Inc.'s] equity holder, Mirant Corp., to make an impermissible 'grab' for MAI's assets and receive distributions even though MAI's creditors are not being paid in full (in glaring violation of section 1129(b)(2)(B) of the Bankruptcy Code)."

Mirant cannot claim consolidation is justified because the subsidiaries are entangled because it separated out the information for a bond tender offer just ahead of the Chapter 11 filing, and temporary consolidation to get the plan confirmed is illegal, Deutsche said.

Meanwhile Mirant Americas Generation, LLC's official committee of unsecured creditors objected to the plan on similar grounds.

It described the disclosure statement as a "confusing, incomprehensible and incomplete description of a proposed scheme," in a filing Monday with the court.

The committee also objected to the proposed substantive consolidation as only temporary and therefore illegal since after exiting, the various companies will have their own separate existence and assets and liabilities.

In addition, it objected that the Mirant Americas Generation notes should not be classed differently from other debt at the company, that Mirant should be required to pay interest on the notes and that the information about the proposed exit facility is too vague.

The ad hoc committee of Mirant Americas Generation, LLC bondholders also objected to the plan and disclosure statement, saying it supports objections made earlier which, it added, Mirant has done little to address in its revised plan.

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