Dynegy Bondholders Sue Over $1.7B Restructuring

Law360, New York (September 22, 2011, 5:33 PM EDT) -- Avenue Investments LP and other investors in distressed power producer Dynegy Inc. asked a New York state court on Wednesday to reverse the company's recent $1.7 billion restructuring, calling the deal, engineered by shareholder Carl Icahn, a fraud that would "fundamentally alter public bond markets."

Holders of $3.6 billion in notes issued by Dynegy claim the company rigged the restructuring to benefit Icahn and other equity investors at the expense of the bondholders.

Designed to avert Dynegy's looming bankruptcy, the restructuring pushed the company's coal-powered and...
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