Spansion committee asks court to vacate statement OK, appoint examiner

By Caroline Salls

Pittsburgh, Jan. 22 - Spansion Inc.'s informal committee of convertible noteholders has asked the U.S. Bankruptcy Court for the District of Delaware to vacate its order approving the company's disclosure statement, postpone the plan of reorganization confirmation hearing and order appointment of a trustee or examiner, according to a Friday court filing.

The noteholders said the disclosure statement order should be vacated because it was entered under "numerous misrepresentations by the debtors."

"The disclosure statement is replete with fundamental misrepresentations," the noteholder group said in the motion.

"The valuation contained therein is admittedly not the debtors' valuation, and, therefore, cannot be the starting point or initial benchmark for a confirmation valuation trial."

In addition, the committee said Spansion has conceded in a presentation to potential exit financing lenders and in a ratings agency presentation that its "business is not a melting ice cube, as the disclosure statement suggests," and that the assumptions underlying the low valuation are intentionally misleading.

"Either the debtors have lied to this court and their creditors or they have lied to prospective lenders, ratings agencies and others," the noteholders said.

The committee said the proposed examiner should be charged with investigating these intentional misrepresentations.

"The debtors' management has not focused its efforts on maximizing the value of the debtors' estates for the benefit of all constituencies," the committee said in the motion.

"Rather, the debtors' management, which hopes to obtain 12% of the equity of [the reorganized debtors], as proposed under the plan, together with their putative equity sponsor Silver Lake, are, in substance, attempting to steal, for lack of a better word, [from the] reorganized debtors."

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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