WASHINGTON (Reuters) - The Supreme Court declined on Monday to hear a challenge to the post-bankruptcy reorganization of Charter Communications Inc.
Law Debenture Trust Co of New York (LDT) and R2 Investments objected when the No. 4 U.S. cable television operator went into Chapter 11 bankruptcy protection in March 2009, emerging in November of that year with its debts cut by $8 billion, or 40 percent.
The bankruptcy was viewed as a major setback for Microsoft co-founder Paul Allen, a major investor.
The objectors sued Charter, its affiliates and Allen himself because they said they were left out of the reorganization negotiations between the company, Allen and other key investors.
LDT was a trustee for holders of $479 million in bonds, while R2 was a stockholder. LDT was told it could recoup 32.7 percent of its claims, while R2 would receive nothing, according to court papers.
Lower courts had denied the objectors’ claims on the basis that, if the claims were to be heard, it would require upending the entire reorganization, which is already in effect.
LDT and R2 asked the Supreme Court to review whether the basis on which the lower court ruled for Charter, known as “equitable mootness,” should be applied in such instances.
The case is Law Debenture Trust Co v. Charter Communications, U.S. Supreme Court, No. 12-847.
Reporting by Lawrence Hurley; Editing by Kevin Drawbaugh, Howard Goller, Gerald E. McCormick and Jeffrey Benkoe