The Bank of New York Mellon Corporation (NYSE:BK) filed a motion with the court asking the federal judge to reject  Chesapeake Energy Corporation (NYSE:CHK)’s plan to redeem its 6.775 percent senior notes to avoid the payment of new interests, according to report from Bloomberg. The senior notes are worth approximately $1.3 billion are due in 2009.


Last Friday, Chesapeake Energy Corporation (NYSE:CHK) filed a request with the United States District Court for the Southern District of New York to confirm that the notice to redeem the senior notes that was issued on or before March 15, 2013 will be timely and effective as specified in the governing indenture. The second largest oil and natural gas producer aims to redeem the notes at par with payments to made 60 days after the issuance of notice in accordance with the Special Early Redemption provision of the notes.

Chesapeake Energy Corporation (NYSE:CHK) said its action is part of its initiative for a broader refinancing of outstanding debt obligations. The company also requested the court to issue a preliminary order that a notice issued by March 15 for a Special Early Redemption at par cannot be interpreted as a notice to redeem at a higher price under the “make-whole” provision.

On the other hand, a filing submitted to the court by The Bank of New York Mellon Corporation (NYSE:BK) argued,  “Chesapeake, having missed the deadline to redeem the notes at par, now demands an advisory opinion from the court, seeking to guarantee the idiosyncratic treatment of a future redemption notice which has not yet been made.”

The bank also cited that the court should not grant Chesapeake’s motion because it is not in danger of irreparable harm. “Chesapeake has suffered no injury and lacks court standing, according to the court papers. The Bank of New York Mellon Corporation (NYSE:BK) serves as the indenture trustee of the notes.

Several investors of Chesapeake Energy Corporation (NYSE:CHK) known as the “adhoc note holder group” filed a separate complaint with the court today asking consent to intervene or participate in the lawsuit. The investors include They include Archer Capital Management LP, Ares Management LLC, Aurelius Capital Management LP, Carlson Capital LP, Cetus Capital LLC, Latigo Partners LLC, Monarch Alternative Capital LP, P. Schoenfeld Asset Management LP, River Birch Capital LLC and Taconic Capital Advisors LP.

United States District Judge Paul Engelmayer will preside over the case in Manhattan on Tuesday.

The stock price of Chesapeake Energy Corporation (NYSE:CHK) is down by 0.65 percent to $21.31 per share as of this writing.