UPC Polska dismisses certain creditors' objections, amends language in plan for others

By Carlise Newman

Chicago, Oct. 28 - UPC Polska, Inc. dismissed some creditors objections to its reorganization plan and amended the language in the plan to satisfy the others.

The company also said that the creditors raise "a whole host of plan confirmation issues" which should be determined at the plan confirmation hearing.

Among the other objections raised is a claim by noteholders that the plan undervalues the company and favors insiders.

In response, UPC Polska said that the noteholders specifically negotiated to receive cash and debt for their claims with the UPC entities receiving equity. UPC said there is no disparate treatment of insider and non-insider claims. Class 3 and Class 5 creditors are receiving distributions commensurate with their claims, the company said.

Specifically, the company responded to Deutsche Bank Trust Co.'s objection that the estimated percentage recoveries in the disclosure statement are based on a value of $234 million. The unsecured creditors committee's financial advisors determined that the company's enterprise value is materially higher than $234 million. Under Chanin's preliminary analysis Classes 3 and 5 would receive the same percentage recoveries on their claim, but Class 4 - the only class of insider-creditors - would receive a percentage recovery of 49%.

Deutsche objected that the statement did not disclose valuation, liquidation and affiliate claims, as well as the position of the unsecured creditors committee on these issues.

But the company said the statement more than adequately allows creditors to draw their own conclusions with respect to alternatives to confirmation and therefore Deutsche's concerns are either adequately disclosed or should be addressed at confirmation.

HBO has objected because it seeks more information with respect to the HBO Communication Ltd. arbitration than is already contained in the statement. In an effort to accommodate HBO's requests, UPC Polska has included additional language. However, certain disclosures requested by HBO are disputed, unknown, speculative or prejudicial to the company, it said.

Furthermore, HBO's requests are of relatively no import because the company is only secondarily liable, if at all, as a guarantor on any HBO claim and HBO has recourse against the company's solvent subsidiaries.

Regarding HBO, UPC Polska has now included the following additional language in the disclosure statement: "The cash to fund the initial cash distribution under the plan is expected to come from the company and its subsidiaries."

SISU Capital Ltd. has asserted that even more disclosure is required and that some information in the disclosure statement is inaccurate.

But UPC Polska said it believes that such further disclosure is unnecessary. However, the company has added further detail regarding the pre-petition negotiation process. UPC also believes that its disclosure regarding SISU's involvement in that process is accurate. However, the company added language to the disclosure statement to indicate that SISU disagrees.

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