UPC Polska, related companies object to creditors' committee's motion to sue UPC Telecom

By Carlise Newman

Chicago, Nov. 7 - UPC Polska Inc. and related companies have submitted an objection to the creditors' committee's motion to seek court permission to begin litigation against UPC Telecom BV, saying the committee does not have standing to assert the claims.

The committee intends to challenge the characterization of $250 million of inter-company transfers as debt and to seek the equitable subordination of an additional $65 million of UPC Telecom's claims on account of alleged "inequitable conduct."

But UPC Polska said the creditors are contractually barred by their restructuring agreement with the company from asserting the proposed claims, and cannot rightfully institute the proposed litigation.

The committee should not permitted to initiate an action on the company's behalf that it could not properly have asserted itself. If the company had the ability to bring the litigation, the committee cannot meet its burden of demonstrating that the company's decision not to do so was unjustified, the company said.

The committee does not deny that holders of 75% of UPC's third-party bonds are bound to vote in favor of the reorganization plan, or that the decision to support the plan was reached after months of negotiations, said the company. The committee's last-minute efforts to derail these proceedings should not be permitted, UPC Polska said.

The related companies, which include UPC Telecom BV, UPC Operations BV, Belmarken Holding BV, and UPC Polska Finance Inc., said the committee's actions are another tactic to bring the company and the UPC parties back to the bargaining table to renegotiate the terms of the restructuring agreement, and should be denied.

The committee has no standing to bring the claims, the parties said. The committee does not properly describe or satisfy the requirements necessary to obtain standing to bring the claims on behalf of the company, and fails to make any factual showing as required by second circuit law. The committee doesn't provide a single affidavit in support of the claims, the parties said, and that failure of proof mandates denial of the motion.

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