On the request of examiner Susheel Kirpalani, a bankruptcy judge on Jan. 27 approved the issuance of subpoenas as part of an effort to determine the circumstances around the November 2011 bankruptcy filings of Dynegy Holdings LLC and several related companies.
The companies sought Chapter 11 protection at the U.S. Bankruptcy Court for the Southern District of New York and immediately sought court approval to get rid of what they called money-losing leases on power generating facilities, two coal units at the Danskammer plant and all of the Roseton plant, in New York. In the Jan. 27 order, Judge Cecelia Morris approved the issuance of subpoenas for the production of documents and authorized examination of persons and entities related to the case.
Kirpalani was authorized, but not directed, to issue subpoenas under Rule 2004 against Dynegy Holdings parent Dynegy Inc. and its non-debtor affiliates and any third party that the examiner reasonably believes, based upon his investigation, may be in possession of documents or information relevant to his investigation. Kirpalani was told by the judge to use his reasonable efforts to first pursue discovery from the debtors, Dynegy Inc., and their respective present and former directors, officers, employees, and professionals before issuing subpoenas on third parties.
“In order to facilitate the diligent discharge of his duties under both section 1106 of the Bankruptcy Code and the examiner order, the examiner requests the power to issue subpoenas for the production of documents and the examination of persons,” said Kirpalani in the Jan. 16 request for subpoena power. “The examiner order mandated a defined investigation and a written report within 60 days of the examiner’s appointment, that is, on or before March 12, 2012. The examiner is cognizant of that deadline and the enormity of the task of gathering, on an expedited basis, facts relevant to the investigation. For those reasons, the examiner requests the ability to issue subpoenas without the need to file separate Rule 2004 applications for each and every respondent that becomes relevant to the examiner’s investigation, subject to the rights of all respondents to contest the scope and burden of any subpoenas at the appropriate time.”
On Dec. 29, 2011, the court entered the examiner order that told the examiner to conduct an “unfettered investigation” of the conduct of the debtors in connection with the prepetition 2011 restructuring and reorganization of the debtors and their non-debtor affiliates, including, without limitation, pre-petition transactions, any possible fraudulent conveyances and whether the debtors are capable of confirming a Chapter 11 plan. On Jan. 11 the U.S. Trustee appointed Kirpalani as examiner, with the court approving that appointment the next day.
The debtor companies are Dynegy Holdings LLC, Dynegy Northeast Generation Inc., Hudson Power LLC, Dynegy Danskammer LLC and Dynegy Roseton LLC.