InSight Health: noteholders object to company's plan confirmation

By Lisa Kerner

Charlotte, N.C., Jan. 20 - InSight Health Services Holding Corp. senior noteholders including Atrium CDO; Lampe, Conway & Co. LLC; and Marblegate Asset Management object to the confirmation of the debtors' prepackaged joint Chapter 11 plan of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The noteholders also asked the court to designate the votes submitted by the Tejas creditors and count the votes of Bennett Management Corp.

According to the noteholders:

• The plan may not be confirmed at this time because it does not meet the requirements set forth in section 1129 of the Bankruptcy Code;

• The debtors counted certain votes in favor of the plan that appear to have been submitted in bad faith and neglected to count votes against the plan that should have been counted; and

• The stockholders agreement must be amended prior to confirmation to prevent the disparate and discriminatory treatment of minority noteholders.

The noteholders said they have made "numerous attempts to negotiate a consensual resolution" but have been unsuccessful because the majority noteholders "have refused to remove certain arbitrary and completely unwarranted provisions that serve to discriminate against noteholders that will hold less than a threshold amount of the new common stock."

InSight, a Lake Forest, Calif., provider of diagnostic imaging services, filed for bankruptcy on Dec. 10 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 10-16564.

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