Spansion convertible noteholders' request for stay of order denied

By Lisa Kerner

Charlotte, N.C., May 3 - Spansion Inc.'s informal committee of convertible noteholders and noteholders Tejas Securities Group Inc. and the John Gorman 401(k) had their request to stay the confirmation of the company's plan of reorganization pending their appeal of the confirmation denied, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The distribution of the new Spansion common stock provided under the April 7 plan will be stayed with respect to class 5A and 5C only through May 14, providing the noteholders file a motion seeking a stay pending appeal by May 3, the filing said.

The committee members, Tejas and the Gorman (401)k are holders of Spansion's 2.25% exchangeable senior subordinated debentures due 2016.

As previously reported, the noteholders said the court denied the parties their ability to update their valuation analysis almost three months after submission of expert reports.

The noteholders said the court also allowed Spansion to ignore a plan modification urged by the committee that would have enhanced creditor distribution.

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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