Document: Roseton OL, LLC v. Dynegy Holdings, Inc., C.A. No. 6689-VCP (Del. Ch. July 29, 2011)
The Court of Chancery found that plaintiffs were not likely to succeed on the merits of their claims that Dynegy Holdings, Inc. (“DHI”) would violate promises made pursuant to clauses of guaranties it had made in favor of plaintiffs’ parent company that prohibited DHI from transferring its “properties and assets substantially as an entirety.” The asset transfer that plaintiffs claimed would violate the guaranties was a proposed transfer by DHI of its entire equity interest in subsidiaries that held DHI’s most profitable power plants to new bankruptcy remote DHI subsidiaries. The Court found that the provision at issue did not likely apply, stating its opinion that the phrase “properties and assets” referred to properties and assets directly owned by DHI, not DHI’s equity ownership interests in subsidiaries. Accordingly, the Court denied the plaintiffs’ request for a temporary restraining order.