Bank of America asks court to disband OCA's official committee of equity security holders

By Jennifer Lanning Drey

Eugene, Ore., June 29 - Bank of America filed a motion to disband OCA, Inc.'s official committee of equity security holders in the company's Chapter 11 case, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Louisiana.

Bank of America said in the motion that the equity shareholders committee should be disbanded because it is unlikely that there will be a meaningful recovery for shareholders.

Bank of America is the administrative agent for the pre-petition and post-petition secured lenders in the Chapter 11 case.

According to the motion, Bank of America also said the court should disband the committee because OCA's equity security holders are not entitled to a distribution under the absolute priority role.

In addition, Bank of America said OCA is "on the eve of soliciting votes on a plan that provides for contingent payments to equity holders, notwithstanding their lack of legal entitlement to such a distribution."

The equity committee's promised litigation tactics and delay will destabilize OCA's business operations and jeopardize value as well as risk the loss of the current plan payments to equity security holders, the motion said.

Bank of America also said "tremendous recent trading volume in the delisted common stock of OCA has resulted in a number of investment funds and other sophisticated parties, who can adequately represent themselves, becoming some of the largest equityholders of OCA."

The costs of the equity committee will be borne by the senior creditors and not the equity class, Bank of America said in the motion. If that happens, there will be a "no risk, all upside" dynamic for the equity committee that is disruptive to OCA's attempts to stabilize its operations, it said.

OCA's U.S. Trustee appointed the equity security holders committee on June 14.

The committee is comprised of Paul Burgon of NightWatch Capital Management, Provo, Utah; David Shuldiner of Kanagawa Holdings LLC, New York; Daniel J. Arbess of Xerion Capital Partners LLC, New York; Adrian J. Costanza, Revere, Mass.; and Charles Stewart, Fort Worth, Texas.

OCA, a Metairie, La., provider of business services to orthodontic and dental practices, filed for bankruptcy on March 14. The Chapter 11 case number is 06-10179.

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