Oklahoma City-based Chesapeake Energy Corp. thinks the U.S. Supreme Court should have a say in a $439 million judgment that was issued against the company last fall in a dispute over a bond issuance. It was a fight in part that grew out of debt run up by the late Aubrey McClendon when he ran the company.
Chesapeake lawyers say the company should not be punished because it relied on a district court ruling that went on to become reversed.
It was last September when a 3-judge panel of the Second Circuit Court in Manhattan refused to reverse a ruling that required Chesapeake to pay $438.7 million including interest to Bank of New York Mellon Corp. The Second Circuit ruled a Manhattan federal judge was correct in using an indenture agreement to calculate damages.
The bond trust Bank of New York Mellon Corp. had argued Chesapeake waited too long to tell bondholders of its plan to redeem $1.3 billion of the debt six years early. Mellon claimed hedge funds and other holders of Chesapeake’s 6.775 percent notes maturing in 2019 were contractually entitled to a special make-whole price because of the early redemption.
Chesapeake took the original action in May 2013 in a move to reduce debt accumulated when the company was under the control of then-chief executive Aubrey McClendon.
The payout totaled $379.7 million of contract-based damages plus nearly $59 million in interest.
