Reuters: Bankruptcy News: Elpida seeks U.S. court approval for sale to Micron

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Elpida seeks U.S. court approval for sale to Micron May 22nd 2013, 16:49 By Tom Hals Wed May 22, 2013 12:49pm EDT May 22 (Reuters) - Japan's Elpida Memory Inc asked U.S. Bankruptcy Court in Delaware on Wednesday to enforce its reorganization plan sale to Micron Technologies Inc, a final step to creating the world's second-largest maker of memory chips. Boise, Idaho-based Micron has been losing money as the market for personal computers steadily loses ground to smartphones and tablets. Acquiring Elpida will allow Micron to create greater economies of scale and will rank the company behind Samsung Electronics in the memory chip market. The majority of Elpida's secured and unsecured creditors approved the plan, which included the sale of assets to Micron for 60 billion yen ($582 million) in cash and another 140 billion yen ($1.36 billion) paid in annual installments until 2019. However, U.S. creditors led by hedge funds Linden Advisors, Owl Creek Asset Management and Taconic Capital Advisers have argued that Elpida is worth 300 billion yen ($2.91 billion). They have been actively fighting the plan, although their final appeal in Japan failed last week, leaving the U.S. courts as their remaining venue. Messages left with the three funds and their attorneys were not immediately returned on Wednesday. Elpida still needs to have its reorganization plan recognized and enforced by a U.S. Bankruptcy Court to protect its U.S. assets from creditors under Chapter 15 of the bankruptcy code. The company's representative said in court papers filed with the U.S. Bankruptcy Court in Wilmington, Delaware, that recognition was urgently needed to prevent upsetting customer relationships. "Any delay in granting recognition could even jeopardize the impending closing of the Micron-Elpida deal, which must happen soon in order to enable the two businesses to merge and reap the benefits of full integration," the company's representative said. Chapter 15 was added to the bankruptcy code in 2005 and is still taking shape. Essentially, it requires U.S. judges to recognize foreign insolvency proceedings and enforce them in the United States. However, a judge can decline recognition if he or she finds the outcome of a foreign proceeding is "manifestly contrary" to U.S. public policy, which happened with Mexican glass maker Vitro SAB de CV. Vitro eventually reached a settlement with the U.S. hedge fund creditors who fought the plan. The judge in Delaware overseeing Elpida's Chapter 15, Christopher Sontchi, warned the company's legal team last year that he didn't have a "problem tanking a case" after the U.S. creditors brought to light a lack of disclosure. The hedge funds are also appealing a November decision by Sontchi approving a technology sale and transfer agreements that the bondholders had said would make the Micron sale inevitable. A U.S. District Court magistrate in Wilmington recommended on Monday that the appeal be withdrawn from mediation and proceed to litigation. The case is Elpida Memory Inc, Delaware Bankruptcy Court, No. 12-10947. Link this Share this Digg this Email Reprints

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