Sunbeam Corp. can move forward with a plan to give secured lenders almost all the shares of the U.S. small-appliance maker and leave bondholders owed more than U.S. $862 million with next to nothing, a federal bankruptcy judge ruled.
Sunbeam's plan to complete its 20-month bankruptcy reorganization gives almost all of the company's shares to its three main lenders, Morgan Stanley & Co., Wachovia Corp., and Bank of America Corp. Bondholders, who are fighting the plan, would get stock options that might have some value depending on Sunbeam's future results. Existing shareholders of the Boca Raton, FL, U.S-based company would get nothing.
Sunbeam's plan includes a release from liability for Morgan Stanley that would nullify a lawsuit by the creditors' panel claiming the financial services firm defrauded bondholders. The panel, in an objection filed last week, said creditors would get nothing in return for the company's annulment of the lawsuit and that the plan is "doomed to fail." (Bloomberg News)
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