Hawkeye Energy unit second-lien lenders ask trustee to form committee

By Lisa Kerner

Charlotte, N.C., Jan. 26 - Hawkeye Energy Holdings, LLC subsidiary Hawkeye Renewables, LLC's second-lien agent Wilmington FSB wants the U.S. trustee to appoint an official committee of unsecured creditors or an official committee of second-lien lenders, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the filing, the trustee "refused to appoint a creditors committee despite the interest of at least three suitable parties."

As a result, "unsecured creditors have no statutory representative to protect their collective interests in relation to the debtors' proposed prepackaged plan of reorganization."

The plan, the filing said, "provides unsecured creditors with a paltry recovery, hands over the keys to the first-lien lenders and gives Thomas H. Lee - the debtors' equity holder and architect of the debtors' leveraged buyout that caused the debtors to incur the massive debt load to be restructured in this case - a gratuitous release of all creditor claims without the consent of unsecured creditors."

The second-lien lenders believe the plan "is based upon an artificially depressed valuation of the debtors - following a trough year of a cyclical business - that deprives the second-lien lenders of a fair and appropriate recovery."

Without an official committee in place, the second-lien lenders said, "The debtors and the first-lien lenders may be able to steamroll the proposed plan without the opposition of a statutory fiduciary."

As previously reported, under Hawkeye's pre-packaged plan:

• Holders of first-lien credit agreement claims will receive their share of $25 million in new secured term loans and new class A units;

• Holders of second-lien credit agreement claims will receive a share of new class B units if they vote to accept the plan, as well as all new class C units;

• Holders of general unsecured claims and equity interests will receive no distribution;

• Holders of priority claims will be paid in full in cash; and

• Holders of other secured claims will either be paid in full in cash, receive the collateral securing the claim or have their claims reinstated.

According to the disclosure statement, class B units will entitle holders to receive 7.5% of all distributions after holders of class A units have received a total of $435 million in distributions.

Class C units entitle holders to receive 10% of all distributions after holders of class A units have received a total of $580 million in distributions.

Hawkeye Renewables is an Iowa Falls, Iowa, manufacturer of alcohol-based fuel derived from corn. Its Chapter 11 case number is 09-14461.

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