A motion has been filed for the appointment of a trustee in the Dynegy Holdings bankruptcy proceedings. Dynegy Holdings is a subsidiary of Synergy Inc (NYSE:DYN) .The petition for a trustee gave the reason as “gross mismanagement”. The United States trustee who filed the motion claimed that recent revelations regarding Dynegy’s handling of the bankruptcy were obvious grounds for the appointment of a trustee. The revelations referred to were those of an examiners report that was released last Friday.
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The examiners report showed numerous instances of bad practice before the companies bankruptcy occurred. The bankruptcy itself proceeded unusually. It was a subsidiary that originally filed for bankruptcy not the parent company. The claim was made after profitable assets of the subsidiary CoalCo were transferred to the parent company. This according to the US trustee shows evidence of a fraudulent transaction and so demonstrates the need for the appointment of a Chapter 11 trustee to be appointed.
Dynegy Holdings originally filed for bankruptcy on Novemeber 7th along with four of its subsidiaries. The infringing restructuring reportedly took place in the months approaching that date. The Blackstone Group had tried to purchase Dynegy Inc. just a year before the Chapter 11 filings. That move took place in August of 2010.
Dynegy Inc. is a Texas energy company based in Houston. It is a large owner and operator of power plants and is involved in the coal and natural gas supply business. The parent company is not in bankruptcy though several of its subsidiaries are. The company’s stock had plummeted on the release of this news and was down more than 12% or $0.09 at just 10:20 this morning. Dynegy had tried to hurry the bankruptcy proceedings last month before the investigation into its restructuring had been completed. The United States trustee had objected to their speed and has now managed to have the report completed.