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Calpine asks court to enforce automatic stay on Canadian debtors' bond resolution process
By Caroline Salls
Pittsburgh, Oct. 11 - Calpine Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to invoke an automatic stay to preserve the company's rights to assert U.S. claim defenses in connection with an attempt by Canadian debtors to sell $564 million of bonds, according to a Wednesday court filing.
According to the motion, in their attempt to monetize the claims, the Canadian debtors have established a process to expedite the resolution of U.S. claims.
However, Calpine said the Canadian debtors are trying to expand a relatively straightforward process by requiring the U.S. debtors to assert and litigate their defenses to proofs of claim based on Calpine's guarantee of the bonds in the Canadian court within the next month.
Calpine said the Canadian debtors are attempting to jump "to the head of the line" in resolving their U.S.-filed proofs of claim.
According to the filing, the U.S. court has jurisdiction over resolution of the claims in question, and the Canadian debtors did not seek leave of the U.S. court before attempting to move forward with the claims resolution in a foreign court.
Calpine also asked the court to require the Canadian debtor and the bonds' indenture trustee to attempt to negotiate a cross-border protocol "to promote the cooperation and coordination and mutual respect for the independent jurisdiction of both the U.S. and Canadian courts and the respective bankruptcy estates."
A hearing is scheduled for Thursday.
Calpine, a San Jose, Calif.-based power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.
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