Chesapeake Energy was denied a request for an emergency court ruling that would have allowed it to start redeeming $1.3 billion in notes early without the risk of paying about $400 million in interest sought by Bank of New York Mellon Corp.
Chesapeake had sought a ruling saying it could issue a notice to bondholders by today informing them it will redeem the 6.775 percent notes at par, or 100 cents on the dollar, six years before they mature. BNY Mellon, as trustee, said the company missed the deadline for such a redemption.U.S. District Judge Paul Engelmayer in Manhattan left open the possibility of a trial over the interpretation of the deadline. Chesapeake argued that March 15 is the final date it can issue the formal notice of early redemption and avoid a so-called make-whole provision, while BNY Mellon said it's the deadline by which the call would need to be completed, and thus it's too late to start the process.The judge also suggested that Chesapeake would have a good chance of defeating the provision that would automatically require payment of the $400 million in interest. He still declined to block the make-whole provision because Chesapeake hadn't proved it would suffer irreparable harm if it was triggered. A company spokesman, Paul Caminiti, declined to comment outside court after meeting with Chesapeake's lawyer.Have more to add? News tip? Tell us
