Mirant asks court to dismiss CSFB, Wachovia's claims for special treatment under credit facility

New York, Jan. 18 - Mirant Corp. asked the U.S. Bankruptcy Court for the Northern District of Texas to dismiss claims filed by Credit Suisse First Boston and Wachovia Bank, NA under pre-bankruptcy credit facilities.

Mirant said that CSFB filed its claim too late while Wachovia has no standing to assert a claim because it covers letters of credit that have been assigned to other lenders.

The dispute relates to a $1.25 billion four-year credit agreement dated July 17, 2001 with Wachovia as issuing bank and CSFB as agent for the lenders. Mirant Corp. was the sole borrower. Wachovia's claim relates to a letter of credit agreement dated Sept. 4, 2001, part of the four-year credit agreement.

In a filing with the bankruptcy court on Saturday, Mirant said CSFB, acting as agent, filed only one proof of claim ahead of the bar date of Dec. 16, 2003. Wachovia filed 28 claims on the bar date, saying it was doing so in its capacity as issuing bank, according to Mirant.

Ten months later, on Oct. 27, 2004, CSFB filed amended claims against various Mirant subsidiaries, both for the original claim as agent and amending the original Wachovia claim, Mirant said.

Under terms of the letter-of-credit agreement, once advances are assigned they convert into revolving credit borrowings and the issuing bank has no further interest, Mirant said in the filing.

Because of the circumstances, Mirant said the bank lenders should only have a pre-petition unsecured claim in the bankruptcy proceedings.

Wachovia, it argued, cannot assert a claim for letter-of-credit advances because they were reassigned.

Neither Wachovia nor the bank lenders are in a position to have an administrative claim nor are they entitled to make a claim against any Mirant subsidiaries and the lenders do not have any rights to drawn letter-of-credit proceeds, the company added.

Mirant said Wachovia had no standing to file claims for letter-of-credit advances assigned to others and CSFB's failure to file a claim against the subsidiaries on time means only the claim against Mirant Corp. stands.

Mirant filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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