Justice Sirikah

Bankruptcy Court Extends Due Date on the Rights of Six Flags, Inc. (OTCBB: SIXFQ) to Restructure Business

by Justice Sirikah December 9, 2009
sixfq_logo.jpgA heated dispute pitting Six Flags, Inc. (OTCBB: SIXFQ, or SIXFQ.ob) and a group of lenders called SFI noteholders, spearheaded by Stark Investments reached a penultimate phase on Monday with the U.S Bankruptcy  judge granting the theme park operator 60 more days to solicit votes on its restructuring plan with no interference of alternative programmes. According to the group that is owed just over half a billion, the dictates of Six Flag’s plan that was formulated by a rival group of lenders led by hedge fund Avenue Capital undervalues the company.

  Hence, SFI had raced against time to submit a different plan and hoped it got the nod ahead of the company’s own. The plan would have allowed the creditors to assume 81 percent of the company’s new stock, versus five percent of the stock that Six Flags had planned to offer. However, the court overruled the optional plan taking note of the negative effects it would bring on the company’s imminent exit from Chapter 11 protection. A further delay into May, 2010 could threaten the company’s capacity to continue operating, Six Flags had indicated before the court.

  “The debtors would be prejudiced by the expense, confusion and possible delay in getting the confirmation if the SFI plan is allowed to go forward”, proclaimed Judge Christopher Sontchi during the hearing. “This company cannot afford to stay in Chapter 11 much longer”, added Paul Harner, Six Flag’s defence attorney.

  SFI’s proposal was the last hurdle for the company before forwarding its plan to JP Morgan Chase & Co. (NYSE: JPM) and HSBC Bank USA among other creditors, for votes. If the lenders vote in favour of the plan, then by the law of averages the bankruptcy court would be obliged to approve the plan.

  The New York-based entertainment concern filed voluntary petitions for Chapter 11 protection in June, reporting $3 billion in assets while being weighed down by a debt of $3.4 billion tied to its acquisitions. For the losses leading to bankruptcy, the company bemoaned a diluted attendance at its theme parks which reflected the global recession, the breakout of swine flu and the unfavourable foreign currency effects at some international parks.

  SIXFQ shares were still trading at $0.10 by the time of writing, the same as the previous day’s session.


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