Former A123, committee reach settlement with convertible noteholders

By Jim Witters

Wilmington, Del., June 17 - B456 Systems, Inc., formerly A123 Systems, Inc., is seeking approval of a settlement with its convertible noteholders, according to documents filed June 17 with the U.S. Bankruptcy Court for the District of Delaware.

The settlement involves a May 2012 securities purchase agreement under which the convertible noteholders - Hudson Bay Master Fund Ltd. and J.P. Morgan Omni SPC, Ltd. - bought a series of senior convertible notes due July 15, 2013.

In October 2012, before the A123 bankruptcy filing, Hudson Bay Capital Management LP, acting as investment manager for the noteholders, issued an "event of default redemption notice" informing the debtor of its election to redeem the entire amount of senior convertible notes owned by Hudson Bay and JPMorgan in full at the agreed-upon price.

In January, Hudson Bay Capital filed a $2.25 million proof of claim on behalf of Hudson Bay and a $691,636 claim on behalf of JPMorgan.

Under the proposed agreement, on the settlement date, the Hudson Bay and JPMorgan claims will be allowed in their full amounts and the noteholders, the committee and the debtors will exchange releases and waive causes of action.

A hearing to consider the settlement is scheduled for 11 a.m. ET on July 25.

B456's plan of liquidation was confirmed on May 20.

Based in Waltham, Mass., A123 designs, develops, manufactures and sells rechargeable lithium-ion batteries and battery systems. The company filed for bankruptcy on Oct. 16, 2012 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 11 case number 12-12859.

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