Post by dmdmd1 on May 22, 2013 17:27:38 GMT -5
The following letters were submitted today to Judge Gropper and the US Trustee:
May 21, 2013
Office of the United States Trustee
Attn: MS Tracy Hope Davis
U.S. Federal Office Building
201 Varick Street, Suite 1006
New York, NY 10014
Telephone: (212) 510-0500
Facsimile: (212) 668-2255
Attn: Brian S. Masumoto
brian.masumoto@usdoj.gov
Re: Official Equity Committee formation for Case #12-10202 Eastman Kodak Company
Dear Ms. Davis and Mr. Masumoto,
This letter is in support of my initial Equity Committee formation request letter which was submitted on April 30, 2013.
Attached is a 5 page letter submitted to Judge Allan Gropper, which details my reasons why
an Equity Committee needs to be formed ASAP, as well as appointment of an Examiner for the above referenced Chapter 11 case.
The main reason for formation of an Official Equity Committee is to seek representation for Common Shareholders in light of allegations of potential Insider Trading by 2nd Lien Lenders
and other Secured & Unsecured Creditors/Debt Holders.
Please appoint an Official Equity Committee before the Chapter 11 case proceeds any further.
Sincerely,
May 21, 2013
The Honorable Judge Allan Gropper
U.S. Bankruptcy Court for the Southern District of New York
One Bowling Green
New York, NY 10004
Case#12-10202 Eastman Kodak Company
Re: Potential Insider Trading by 2nd Lien Lenders and other Secured & Unsecured Creditors/Debt Holders
Dear Honorable Judge Allan Gropper,
Eastman Kodak Company (Debtors) entered a petition under Chapter 11 protection of the Bankruptcy Code on January 19, 2012. Since the petition date the Creditors/Debt Holders of the Secured 2018 Notes, Secured 2019 Notes, Unsecured 2017 Conv., and other Debt instruments (currently referred to as the 2nd Lien Lenders ) have potentially been freely trading these bonds while in possession of Material Non-Public Information (MNPI).
Simply put, the 2nd Lien Lenders, and other financial institutions/companies have potentially been trading the Secured and Unsecured Bonds while having intimate MNPI during the negotiations of the Plan Of Reorganization (POR) between the 2nd Lien Lenders, Unsecured Creditors Committee, and the Debtors since January 19, 2012 and possibly up to the present.
Exhibit A: Article titled “Eastman Kodak Company Announces the Expiration of the Offer to Subscribe for Loans and Exchange Notes for Loans”
www.businesswire.com/news/home/20....Offer-Subscribe
The following excerpt from the above referenced article published on March 15, 2013 stated:
“ROCHESTER, N.Y.--(BUSINESS WIRE)--Eastman Kodak Company (“Kodak” or the “Company”) today announced the expiration, at 5:00 p.m. on March 14, 2013, of the offer to holders of its outstanding 10.625% Senior Secured Notes due March 15, 2019 (CUSIP Nos. 277461BK4 and U27746AH6) and 9.75% Senior Secured Notes due March 1, 2018 (CUSIP Nos. 277461BH1 and U27746AG8) (together, the “Notes”) to (i) subscribe for up to an aggregate amount of $455,000,000 of term loans (the “New Money Loans”) under a new junior secured priming superiority debtor-in-possession term loan facility (the “Junior DIP Facility”); and (ii) exchange Notes for up to an aggregate amount of $375,000,000 of junior term loans (the “Junior Loans”) under the Junior DIP Facility. The offer was oversubscribed.”
The Secured Bonds with CUSIP numbers stated above corresponds to the Secured Bonds described in the Form 8-K released by the Debtors on March 25, 2013 (Exhibit B)
Exhibit B: Form 8-K released on March 25, 2013
ek.client.shareholder.com/secfiling.cfm?filingID=31235-13-16&CIK=31235
The excerpt from Form 8-K stated:
“On March 22, 2013, Eastman Kodak Company (the “Company”) and its U.S. subsidiaries (the “Subsidiary Guarantors”) entered into a Debtor-in-Possession Loan Agreement (the “Junior DIP Credit Agreement”) with the lenders signatory thereto (the “Lenders”) and Wilmington Trust, National Association, as agent (the “Agent”). Pursuant to the terms of the Junior DIP Credit Agreement, the Lenders provided the Company with term loan facilities in an aggregate principal amount of $848,200,000, consisting of $473,200,000 of new money term loans (the “New Money Loans”) and $375,000,000 of junior term loans (the “Junior Loans”). The Junior Loans were issued in exchange for the same principal amount of Notes (defined below) pursuant to the offer described in item 8.01 of this report. The maturity date of the loans made under the Junior DIP Credit Agreement is the earliest to occur of (i) September 30, 2013, (ii) the effective date of the Company’s plan of reorganization (the “Chapter 11 Plan”) and (iii) the acceleration of such loans. The Junior DIP Credit Agreement provides that, subject to the satisfaction of certain conditions, upon the Company’s emergence from bankruptcy up to $653,700,000 of New Money Loans and the Junior Loans may be converted into loans under an exit facility.
The New Money Loans bear interest at the rate of LIBOR plus 10.5% per annum, with a LIBOR floor of 100 bps. The Junior Loans consist of a tranche in an aggregate principal amount of $126,784,000 bearing interest at a rate of 10.625% per annum and a tranche in an aggregate principal amount of $248,216,000 bearing interest at a rate of 9.75% per annum. Each existing and future direct or indirect U.S. subsidiary of the Company (other than indirect U.S. subsidiaries held through foreign subsidiaries and certain immaterial subsidiaries (if any)) have agreed to provide unconditional guarantees of the obligations of the Company under the Junior DIP Credit Agreement. Subject to certain exceptions, obligations under the Junior DIP Credit Agreement are secured by first, second and third priority liens on all the collateral securing obligations under the Company’s existing DIP credit agreement and 65% of the equity interests of certain material “first-tier” foreign subsidiaries of the Company. The Junior DIP Credit Agreement was approved by the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in orders issued on January 24, 2013 and March 8, 2013.”
Exhibit C: Docket #3689 filed on May 10, 2013 by Akin Gump et. al. who represents the 2nd Lien Lenders
Starting on page 5 and continued to page 12 includes “Exhibit A & Exhibit B” which lists 2nd Lien Note Holders Committee and Lead Lenders, respectively. The information on these two exhibits details the names, addresses, and “nature & amount of disclosable economic interest” of each financial institution from January 2012 to May 2013.
An easier representation of this information was enumerated in a table that was included in Docket #3730 (filed on May 21, 2013 by a pro se shareholder), page 7, which is duplicated below (Exhibit-1). Information from Docket #0153 was also used to create Exhibit-1.
If we were to focus on Blackstone GSO Capital Partners, they owned as of January 31, 2012, $11 million in Secured 2018 Notes, $47.5 million in Secured 2019 Notes, and $5 million in Unsecured 2017 Conv. Notes. As we move to the second set of columns labeled “Debt Holdings on May 7, 2013”, Blackstone owned $66.3 million in Secured 2018 Notes (an increase of $55.3 million since the petition date), $38.1 million in Secured 2019 Notes (a decrease of $9.4 million since the petition date), $0 in Unsecured 2017 Conv. Notes (a decrease of $5 million since the petition date). As these bonds were being traded, 2nd Lien Lenders such as Blackstone had Material Non-Public Information, since the 2nd Lien Lenders were negotiating the Junior DIP Facility/Exit Facility and the POR.
Blackstone is also the financial advisor to the 2nd Lien Lenders Committee, therefore there is also a potential conflict of interest.
According to the table “Exhibit -1” above, Blackstone is not the only institution that bought (added to their positions) and sold (decreased their positions) since the petition date (January 19, 2012).
It is evident that the 2nd Lien Lenders are also the exit financing lenders, who will be the owners of the new company. They gave themselves a 16% interest rate. Even though New Kodak cash is more than the $653.7 million in exit financing, they get 65% of New Kodak's assets as collateral and forced the Board of Directors/Debtors to give them 85% of the new company.
The 2nd Lien Lenders, and other Unsecured Debt Holders (“Secured and Unsecured Creditors”) had MNPI which outlined and detailed the very last class of stakeholders that would be benefitting from the POR. According to the POR, that was released by the Debtors on April 30, 2013, the Secured and Unsecured Creditors would be awarded 85% and 15% of the new company equity, respectively. Therefore, it isn’t a very large leap of faith to believe that these Secured and Unsecured Creditors positioned themselves and traded from the period starting from the petition date (January 19, 2012) to the release of the POR on April 30, 2013, in order to corner the market and assemble a blocking position in regards to the Secured 2018 & 2019 Notes (which corresponds to the $375 million worth of “Junior Loans” that were given 85% of the new company equity).
Judge Gropper, I implore you to consider the potential of Insider Trading by the Secured and Unsecured Creditors because they were the stakeholders that were negotiating the Junior DIP Facility/Exit Facility, and the POR . They were also the ones that conveniently kept on trading while having full knowledge of where the POR would stop benefitting any stakeholder. That cut off point was the Secured 2018 Notes and Secured 2019 Notes. Not only did some of these 2nd Lien Holders trade in the Secured bonds but they also traded in the Unsecured bonds in order to create a blocking position and monopoly on the new company equity.
I am a single common shareholder that believes in the notion that the equity markets, which Eastman Kodak and many other iconic companies are traded in, are fair and transparent. Obviously, with the Chapter 11 proceedings that have transpired, it has left me, and other shareholders, shocked at the fact that the Board of Directors/Debtors would allow such a lack of fiduciary responsibility to its shareholders. The Board of Directors/Debtors have done nothing to protect the interests of the shareholders. A blatant example is the potential of Insider Trading by the Secured and Unsecured Creditors while being in possession of Material
Non-Public Information.
If Wall Street, the governing regulators, and the US Court System want to promote confidence and transparency among the markets, whether it’s in the equity, bond, or debt markets, retail common shareholders need to be reassured that they are not being exploited, otherwise the whole process and idea of having open markets will never succeed.
If the Secured and Unsecured Creditors claim that there was no Insider Trading, then there would be no harm in appointing an independent Examiner that can investigate, subpoena, and depose (under oath), those entities that might be guilty of Insider Trading.
Equally important, there should also be an appointment of an Official Equity Committee in order to represent the interests of the Common Shareholders, since it is clear that the Board of Directors/ Debtors have neglected their fiduciary responsibilities to shareholders as evidenced in the cancellation of common shares in the POR released on April 30, 2013.
Thank you, Judge Gropper, for taking the time to consider these issues.
Sincerely,
May 21, 2013
Office of the United States Trustee
Attn: MS Tracy Hope Davis
U.S. Federal Office Building
201 Varick Street, Suite 1006
New York, NY 10014
Telephone: (212) 510-0500
Facsimile: (212) 668-2255
Attn: Brian S. Masumoto
brian.masumoto@usdoj.gov
Re: Official Equity Committee formation for Case #12-10202 Eastman Kodak Company
Dear Ms. Davis and Mr. Masumoto,
This letter is in support of my initial Equity Committee formation request letter which was submitted on April 30, 2013.
Attached is a 5 page letter submitted to Judge Allan Gropper, which details my reasons why
an Equity Committee needs to be formed ASAP, as well as appointment of an Examiner for the above referenced Chapter 11 case.
The main reason for formation of an Official Equity Committee is to seek representation for Common Shareholders in light of allegations of potential Insider Trading by 2nd Lien Lenders
and other Secured & Unsecured Creditors/Debt Holders.
Please appoint an Official Equity Committee before the Chapter 11 case proceeds any further.
Sincerely,
May 21, 2013
The Honorable Judge Allan Gropper
U.S. Bankruptcy Court for the Southern District of New York
One Bowling Green
New York, NY 10004
Case#12-10202 Eastman Kodak Company
Re: Potential Insider Trading by 2nd Lien Lenders and other Secured & Unsecured Creditors/Debt Holders
Dear Honorable Judge Allan Gropper,
Eastman Kodak Company (Debtors) entered a petition under Chapter 11 protection of the Bankruptcy Code on January 19, 2012. Since the petition date the Creditors/Debt Holders of the Secured 2018 Notes, Secured 2019 Notes, Unsecured 2017 Conv., and other Debt instruments (currently referred to as the 2nd Lien Lenders ) have potentially been freely trading these bonds while in possession of Material Non-Public Information (MNPI).
Simply put, the 2nd Lien Lenders, and other financial institutions/companies have potentially been trading the Secured and Unsecured Bonds while having intimate MNPI during the negotiations of the Plan Of Reorganization (POR) between the 2nd Lien Lenders, Unsecured Creditors Committee, and the Debtors since January 19, 2012 and possibly up to the present.
Exhibit A: Article titled “Eastman Kodak Company Announces the Expiration of the Offer to Subscribe for Loans and Exchange Notes for Loans”
www.businesswire.com/news/home/20....Offer-Subscribe
The following excerpt from the above referenced article published on March 15, 2013 stated:
“ROCHESTER, N.Y.--(BUSINESS WIRE)--Eastman Kodak Company (“Kodak” or the “Company”) today announced the expiration, at 5:00 p.m. on March 14, 2013, of the offer to holders of its outstanding 10.625% Senior Secured Notes due March 15, 2019 (CUSIP Nos. 277461BK4 and U27746AH6) and 9.75% Senior Secured Notes due March 1, 2018 (CUSIP Nos. 277461BH1 and U27746AG8) (together, the “Notes”) to (i) subscribe for up to an aggregate amount of $455,000,000 of term loans (the “New Money Loans”) under a new junior secured priming superiority debtor-in-possession term loan facility (the “Junior DIP Facility”); and (ii) exchange Notes for up to an aggregate amount of $375,000,000 of junior term loans (the “Junior Loans”) under the Junior DIP Facility. The offer was oversubscribed.”
The Secured Bonds with CUSIP numbers stated above corresponds to the Secured Bonds described in the Form 8-K released by the Debtors on March 25, 2013 (Exhibit B)
Exhibit B: Form 8-K released on March 25, 2013
ek.client.shareholder.com/secfiling.cfm?filingID=31235-13-16&CIK=31235
The excerpt from Form 8-K stated:
“On March 22, 2013, Eastman Kodak Company (the “Company”) and its U.S. subsidiaries (the “Subsidiary Guarantors”) entered into a Debtor-in-Possession Loan Agreement (the “Junior DIP Credit Agreement”) with the lenders signatory thereto (the “Lenders”) and Wilmington Trust, National Association, as agent (the “Agent”). Pursuant to the terms of the Junior DIP Credit Agreement, the Lenders provided the Company with term loan facilities in an aggregate principal amount of $848,200,000, consisting of $473,200,000 of new money term loans (the “New Money Loans”) and $375,000,000 of junior term loans (the “Junior Loans”). The Junior Loans were issued in exchange for the same principal amount of Notes (defined below) pursuant to the offer described in item 8.01 of this report. The maturity date of the loans made under the Junior DIP Credit Agreement is the earliest to occur of (i) September 30, 2013, (ii) the effective date of the Company’s plan of reorganization (the “Chapter 11 Plan”) and (iii) the acceleration of such loans. The Junior DIP Credit Agreement provides that, subject to the satisfaction of certain conditions, upon the Company’s emergence from bankruptcy up to $653,700,000 of New Money Loans and the Junior Loans may be converted into loans under an exit facility.
The New Money Loans bear interest at the rate of LIBOR plus 10.5% per annum, with a LIBOR floor of 100 bps. The Junior Loans consist of a tranche in an aggregate principal amount of $126,784,000 bearing interest at a rate of 10.625% per annum and a tranche in an aggregate principal amount of $248,216,000 bearing interest at a rate of 9.75% per annum. Each existing and future direct or indirect U.S. subsidiary of the Company (other than indirect U.S. subsidiaries held through foreign subsidiaries and certain immaterial subsidiaries (if any)) have agreed to provide unconditional guarantees of the obligations of the Company under the Junior DIP Credit Agreement. Subject to certain exceptions, obligations under the Junior DIP Credit Agreement are secured by first, second and third priority liens on all the collateral securing obligations under the Company’s existing DIP credit agreement and 65% of the equity interests of certain material “first-tier” foreign subsidiaries of the Company. The Junior DIP Credit Agreement was approved by the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in orders issued on January 24, 2013 and March 8, 2013.”
Exhibit C: Docket #3689 filed on May 10, 2013 by Akin Gump et. al. who represents the 2nd Lien Lenders
Starting on page 5 and continued to page 12 includes “Exhibit A & Exhibit B” which lists 2nd Lien Note Holders Committee and Lead Lenders, respectively. The information on these two exhibits details the names, addresses, and “nature & amount of disclosable economic interest” of each financial institution from January 2012 to May 2013.
An easier representation of this information was enumerated in a table that was included in Docket #3730 (filed on May 21, 2013 by a pro se shareholder), page 7, which is duplicated below (Exhibit-1). Information from Docket #0153 was also used to create Exhibit-1.
If we were to focus on Blackstone GSO Capital Partners, they owned as of January 31, 2012, $11 million in Secured 2018 Notes, $47.5 million in Secured 2019 Notes, and $5 million in Unsecured 2017 Conv. Notes. As we move to the second set of columns labeled “Debt Holdings on May 7, 2013”, Blackstone owned $66.3 million in Secured 2018 Notes (an increase of $55.3 million since the petition date), $38.1 million in Secured 2019 Notes (a decrease of $9.4 million since the petition date), $0 in Unsecured 2017 Conv. Notes (a decrease of $5 million since the petition date). As these bonds were being traded, 2nd Lien Lenders such as Blackstone had Material Non-Public Information, since the 2nd Lien Lenders were negotiating the Junior DIP Facility/Exit Facility and the POR.
Blackstone is also the financial advisor to the 2nd Lien Lenders Committee, therefore there is also a potential conflict of interest.
According to the table “Exhibit -1” above, Blackstone is not the only institution that bought (added to their positions) and sold (decreased their positions) since the petition date (January 19, 2012).
It is evident that the 2nd Lien Lenders are also the exit financing lenders, who will be the owners of the new company. They gave themselves a 16% interest rate. Even though New Kodak cash is more than the $653.7 million in exit financing, they get 65% of New Kodak's assets as collateral and forced the Board of Directors/Debtors to give them 85% of the new company.
The 2nd Lien Lenders, and other Unsecured Debt Holders (“Secured and Unsecured Creditors”) had MNPI which outlined and detailed the very last class of stakeholders that would be benefitting from the POR. According to the POR, that was released by the Debtors on April 30, 2013, the Secured and Unsecured Creditors would be awarded 85% and 15% of the new company equity, respectively. Therefore, it isn’t a very large leap of faith to believe that these Secured and Unsecured Creditors positioned themselves and traded from the period starting from the petition date (January 19, 2012) to the release of the POR on April 30, 2013, in order to corner the market and assemble a blocking position in regards to the Secured 2018 & 2019 Notes (which corresponds to the $375 million worth of “Junior Loans” that were given 85% of the new company equity).
Judge Gropper, I implore you to consider the potential of Insider Trading by the Secured and Unsecured Creditors because they were the stakeholders that were negotiating the Junior DIP Facility/Exit Facility, and the POR . They were also the ones that conveniently kept on trading while having full knowledge of where the POR would stop benefitting any stakeholder. That cut off point was the Secured 2018 Notes and Secured 2019 Notes. Not only did some of these 2nd Lien Holders trade in the Secured bonds but they also traded in the Unsecured bonds in order to create a blocking position and monopoly on the new company equity.
I am a single common shareholder that believes in the notion that the equity markets, which Eastman Kodak and many other iconic companies are traded in, are fair and transparent. Obviously, with the Chapter 11 proceedings that have transpired, it has left me, and other shareholders, shocked at the fact that the Board of Directors/Debtors would allow such a lack of fiduciary responsibility to its shareholders. The Board of Directors/Debtors have done nothing to protect the interests of the shareholders. A blatant example is the potential of Insider Trading by the Secured and Unsecured Creditors while being in possession of Material
Non-Public Information.
If Wall Street, the governing regulators, and the US Court System want to promote confidence and transparency among the markets, whether it’s in the equity, bond, or debt markets, retail common shareholders need to be reassured that they are not being exploited, otherwise the whole process and idea of having open markets will never succeed.
If the Secured and Unsecured Creditors claim that there was no Insider Trading, then there would be no harm in appointing an independent Examiner that can investigate, subpoena, and depose (under oath), those entities that might be guilty of Insider Trading.
Equally important, there should also be an appointment of an Official Equity Committee in order to represent the interests of the Common Shareholders, since it is clear that the Board of Directors/ Debtors have neglected their fiduciary responsibilities to shareholders as evidenced in the cancellation of common shares in the POR released on April 30, 2013.
Thank you, Judge Gropper, for taking the time to consider these issues.
Sincerely,
