UPC Polska creditor calls revised Chapter 11 plan "unfair to non-insider" unsecured creditors

By Jeff Pines

Washington, Jan. 14 - SISU Capital Ltd. called UPC Polska Inc.'s amended Chapter 11 plan "unfair to non-insider, non-conflicted unsecured creditors," in a filing with the U.S. Bankruptcy Court for the Southern District of New York.

SISU owns 25% of UPC Polska's 14½% senior discount notes due 2009 and more than 7% of its 14½% senior discount notes due 2008 and is the company's second largest unaffiliated, unsecured creditor.

Under the new plan, holders of UPC Polska's notes will receive $80 million in cash, $100 million in new 9% notes due 2007 and $14.5 million of UnitedGlobalCom Inc. stock, based on the Dec. 15 Nasdaq closing price. The new plan of reorganization was agreed with Polska Finance, the company's affiliated creditors, UPC Operations BV, the participating noteholders and the Official Committee of Unsecured Creditors. The various parties have entered into a stipulation concerning the modified plan.

A hearing on the amended plan of reorganization will be held on Jan. 21 and Jan. 22.

SISU believes the proposed distributions are based on an unfairly lower valuation than the Official Committee of Unsecured Creditors and SISU's financial advisors have reached. The company values itself at $234 million.

SISU does not list the committee's valuation range in its motion, but said the committee's financial advisor estimated the company's liquidation value to be $315 million.

Hexagon Capital, SISU's financial advisor, estimates UPC Polska's value to be $529-$712 million with a liquidation value of $449 million.

SISU contends: "The debtor and its insider unsecured creditors have wrongfully transferred funds among and between themselves and jerry built the valuation process hoping to mislead the court," and others.

It said the goal of the insiders was to retain control of 100% of UPC Polska's equity and recover much more than 26 cents on the dollar.

Furthermore, SISU contends the plan contains "numerous fatal defects" that make the plan "patently uncomfirmable."

It cites discriminatory treatment between public holders of UPC Polska notes and those held by insiders. Public noteholders are classifed as class 3 in the plan, but notes owned by UPC Telecom, Belmarken Holdings BV claims and others are classified as class 4. The bankruptcy code requires essentially similar claims to be classified together, but SISU says many of the class 4 claims are not substantially similar. Class 4 claims will get a pro rata share of $15 million in cash and 100% of company's new common stock.

In addition, SISU said there are improper releases and injunctions, improper and unreasonable settlement of claims, the plan does not meet the "best interests" test, which would provide a greater recovery than Chapter 7, it does not meet the feasibility requirements under the bankruptcy code and that the plan was not proposed with "honesty and good intentions."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.