A group of Windstream Holdings Inc. creditors are planning to object to its proposed bankruptcy plan and settlement with Uniti Group Inc. because it unfairly benefits creditors including Elliott Management Corp., according to a letter filed in bankruptcy court, Bloomberg News reported. The settlement strips value from Windstream for the benefit of equity rights offering backstop parties, and was designed to give them additional benefits to secure their support for the bankruptcy plan, according to a lawyer for second-lien creditor Contrarian Capital Management LLC. The second-lien creditor group represented by Milbank LP intends to file a formal objection to the settlement and restructuring plan, according to the letter. The proposed bankruptcy plan isn’t fair to all Windstream creditors in part because the proposed Uniti stock sale in the settlement isn’t open to any participants beyond the backstop parties, according to the letter signed by James Millar at Faegre Drinker Biddle & Reath LLP. By selling Uniti shares at a substantial discount, it transfers at least $150 million of value to those creditors, resulting in a windfall of $527.4 million based on recent market prices. Both the settlement and restructuring plan announced by Windstream Monday are broadly opposed by creditors who are not signatories to the bankruptcy plan, according to the letter. The proposed settlement will give Windstream more than $700 million in cash and $1.75 billion in capital improvements, and Contrarian believes the second-lien and unsecured creditors have a claim to at least some of that value.
