Molycorp Inc.'s bondholders and unsecured creditors are in full revolt against the rare-earths company's version of a turnaround, challenging the company's right to stay in control of its chapter 11 bankruptcy, Dow Jones Newswires reported yesterday. In court filings, lawyers for bondholders and unsecured creditors claimed that Colorado-based Molycorp has capitulated to demands from Oaktree Capital Group and abandoned its duty to steer the best course out of bankruptcy. They want to open the door to reorganization plans that would compete with the one proposed by Molycorp. The company is mothballing its California production facility and is pinning its hopes on its rare-earths processing business. Bondholders say that a "frantic" two-month sale effort is not the best way to get the value out of the business, and they have moved to terminate the period during which only Molycorp can propose a chapter 11 plan. Creditors contend that Molycorp recently agreed to a chapter 11 plan that provides for full payment to Oaktree, $514 million. Bondholders have asked for a Nov. 16 hearing to challenge Molycorp's bid to hang on to exclusive control of its bankruptcy proceeding.
