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Patriot Coal equity committee won't be appointed, court rules

The bankruptcy court overseeing the Chapter 11 proceedings of Patriot Coal ruled that it would not require the appointment of an equity committee in the case, saying in a May 10 order, “[t]here appears to be no substantial likelihood that equity will receive a meaningful distribution in these cases to justify appointment of a committee.”

The motion to appoint an official equity panel has been hanging around in the case since last summer, when the proceeding was still under the jurisdiction of the bankruptcy court in Manhattan.

As reported, the motion was filed in late August of 2012 by three shareholders, CompassPoint Partners, Frank Williams, and Eric Wagoner, who argued that an official equity committee was necessary “to ensure the integrity of the bankruptcy process for shareholders and to assure their adequate representation in these proceedings.” (See “Patriot Coal shareholders seek appointment of official equity panel,” Aug. 27, 2012).

But the bankruptcy court in St. Louis, Mo., said there was no evidence that the company’s board of directors and the unsecured creditors’ committee named in the case, both of which owe fiduciary duties to shareholders, would not “adequately represent the interests of equity holders.” – Alan Zimmerman