Mirant judge denies move to sanction equity holders but requires disclosure of links to news release

New York, April 20 - Mirant Corp.'s official equity committee and its counsel will not be subject to sanctions, at least for now, but all members of the committee will have to disclose any links to a news release, judge Dennis Michael Lynn ruled Tuesday.

Lynn denied a motion from the official committee of unsecured creditors to impose sanctions but did so without prejudice, allowing the creditors to try again at some point in the future.

"Based on the representation of the counsel to the equity committee, sanctions will not be imposed on the equity committee or its counsel at this time," Lynn said in his order.

But he said that within five days each member of the equity committee will have to file with the court an affidavit or declaration signed under oath with a "full and complete description" of their involvement or knowledge of a press release, any communications they had with the people who prepared the press release and whether they saw a draft. Equity committee members will also have to disclose any relationship with the public relations firm that prepared the release.

The declarations will be public.

The judge added that it may change the order, depending on the contents of the affidavits.

The Mirant creditors had asked for the sanctions in a motion filed April 6 - although because the motion was filed under seal details of the allegations were not made public.

At the time the creditors committee said it needed to keep its motion confidential because it contains information that could be considered material under the court order setting up a Chinese wall preventing confidential information from being used in trading and analysts' reports.

In a separate matter, Mirant in another filing Tuesday waived its right to impose sanctions and remedies on Paulson & Co. for allegedly making transfers without giving notice.

As of Dec. 15, 2004, funds managed by Paulson had acquired $404.523 million of Mirant's bank debt and bonds but had not disclosed those purchases to Mirant even though they were above the $250 million notification threshold.

Mirant said Paulson's actions will not affect its net operating loss carryovers, which the notification procedures are designed to protect.

Mirant, an Atlanta-based power company, filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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