Dynegy Inc. (NYSE:DYN), the ailing energy generation company, seemed to be facing a big sell off recently by Seneca Capital Management. Seneca, which was the second largest shareholder in the company, got rid of one third of its shares last week. In a filing made today the fund revealed its current holdings in Dynegy to be only around 2.55%. This represents a total share holding of about 3,139,900 shares. According to a filing last week the fund was holding around 6.69% of the company which compares with the 10%, or 12.23 million stake the company was thought to have held before that. The company had acquired up to 10% last August when it was actively purchasing shares.

The shares that were divested in the past week appear to have been traded mostly on Thursday last, the 15th of March. On that day alone the fund sold around 3 million shares, representing more than half of the total sell. The company is no longer the second biggest holder of shares in the company with at least two, Franklin Advisers, and Habrok Capital management holding larger shares now. The largest holder of Dynegy stock is still Carl Ichan’s hedge fund, Ichan associates.

Dynegy has been struggling for some time under the weight of debt and filed for a Chapter 11 bankruptcy. An argument last week from the US trustee in the case sought the employment of an independent trustee after alleged mismanagement by the Dynegy. A judge ordered mediation in the case but it pointed to a possibly messy breakup of the company’s assets in this restructuring. If the company is found to have been wrong in its transfer of assets before filing for Chapter 11 then the move by Seneca Capital Management could be seen as a prescient one.