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Spansion trustee seeks full payment to senior noteholders before distribution to debenture holders
By Caroline Salls
Pittsburgh, Oct. 19 - Spansion Inc. senior notes trustee U.S. Bank NA filed a lawsuit Monday asking the U.S. Bankruptcy Court for the District of Delaware to rule that the senior noteholders are entitled to payment in full plus interest before any distributions are made to holders of the company's exchangeable debentures.
The defendants named in the lawsuit include Spansion; debtors Spansion Technology LLC, Spansion LLC, Cerium Laboratories LLC and Spansion International, Inc.; and Wilmington Trust Co. as trustee for Spansion's 2¼% senior exchangeable debentures due 2016.
U.S. Bank said Spansion's proposed plan of reorganization classified both the senior noteholders and the holders of the exchangeable notes as general unsecured creditors, and the sole distribution to general unsecured creditors is a share of 39.55 million shares of new Spansion common stock.
However, the trustee said the plan says that no distribution can be made to the holders of the exchangeable debentures until the rights of the senior noteholders have been satisfied.
As a result, the senior notes trustee is asking the court to declare that if any shares are distributed under the plan, the senior noteholders are entitled to be paid in full plus interest before any distribution is made to holders of the subordinated exchangeable debentures.
U.S. Bank also said the senior noteholders are entitled to receive any new common stock attributed to the exchangeable debenture holders.
Spansion, a Sunnyvale, Calif.-based maker of flash memory products, filed for bankruptcy on March 1, 2009. Its Chapter 11 case number is 09-10690.
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