Bosque lenders object to statement, call equity infusion unnecessary

By Caroline Salls

Pittsburgh, Aug. 17 - Bosque Power Co., LLC's pre-bankruptcy agent and "required lenders" objected to the disclosure statement for the company's plan of reorganization, and both creditor classes entitled to vote on the plan intend to reject it, according to a Tuesday filing with the U.S. Bankruptcy Court for the Western District of Texas.

Specifically, the lenders said the holders of pre-bankruptcy senior secured claims and the Lauren claim have told the court that they will reject Bosque's plan in favor of a competing plan filed the pre-bankruptcy lenders.

In addition, the agent and required lenders said the company's plan violates the absolute priority rule of the Bankruptcy Code.

The lenders said Bosque's plan also fails to meet a new value exception of the absolute priority rule because the equity infusion to come from plan sponsor Arcapita Bank BSC "is neither necessary to the debtors' successful reorganization nor reasonably equivalent to the value that Arcapita will receive in return."

"Even if circumstances arise that would cause the debtors to require an equity infusion, the debtors' disclosure statement fails to provide any, let alone adequate, information regarding such need," the objection said.

Bosque, a Laguna Park, Texas-based power company, filed for bankruptcy on March 24. Its Chapter 11 case number is 10-60348.

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