J. Mark Chevallier, Esq. 

State Bar No. 04189170 

MCGUIRE, CRADDOCK & STROTHER, P.C. 

2501 N. Harwood, Suite 1800 

Dallas, Texas 75201 

Telephone: (214) 954-6800 

Facsimile: (214) 954-6850 

Email: mchevallier@mcslaw.com 

Hugh M. McDonald, Esq. 

Keith C. Nusbaum, Esq. 

SNR DENTON US LLP 

1221 Avenue of the Americas 

New York, New York 10020 

Telephone: (212) 768-6700 

Facsimile: (212) 768-6800 

Email: Hugh.Mcdonald@snrdenton.com 

Email: Keith.Nusbaum@snrdenton.com 

Co-counsel for Commerzbank AG, ABN AMRO Inc., 

Australia and New Zealand Banking Group Limited, 

Barclays Bank PLC, BNP Paribas, Credit Lyonnais, Danske 

Bank A/S, ING Bank, Intesa San Paolo (formerly known as Banca Intesa), 

and The Royal Bank of Scotland PLC 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

FORT WORTH DIVISION 

MIRANT CORPORATION, 

 

 v. 

COMMERZBANK AG, et al.

 

ACTION NO. 4:06-CV-013-Y 

(1-3-5 DOCKET LAW CLERK) 

Memorandum of Law in Opposition to Plaintiff MC Asset 

Recovery LLC’s Motion for Leave to File Supplement, 

Request for Judicial Notice and Motion to Supplement the Record

Case 4:06-cv-00013-Y Document 56 Filed 10/27/10 Page 1 of 10 PageID 1371
The Defendants, Lenders,1

 hereby submit this memorandum of law in opposition to the 

motion of Plaintiff MC Asset Recovery, LLC (“MCAR”) for leave to file supplement, request for 

judicial notice and supplement of the record (the “Motion”). 

PRELIMINARY STATEMENT 

MCAR seeks to file what it refers to as a “short” supplement to its already voluminous 

filings in order to bring to the Court’s attention a “settlement” that was already referenced in 

their pleadings in order to demonstrate that there is a creditor (albeit the former parent to Mirant) 

that was not paid in full. In fact, the settlement is merely the result of Mirant manufacturing a 

situation whereby the Southern Company and Southern Company Services, Inc. (together 

“Southern”) negotiated to accept a Class 3 claim knowing it would only receive stock valued at 

approximately fifty percent of its submitted claim. By allowing such a claim, neither Mirant nor 

MCAR can assert that creditors were not paid in full. This contrived scenario, which is now the 

basis for MCAR’s changed circumstances, should be given no credence by the Court, and as 

such, the Court should not permit MCAR to file its irrelevant supplement. 

ARGUMENT 

In the Motion, MCAR (1) requests leave to file a Supplement to its previously filed Brief 

in Support of Objections to Proposed Findings of Fact and Conclusions of Law and Plaintiff’s 

Brief in Response to Defendants’ Objections to Proposed Findings of Fact and Conclusions of 

Law; (2) requests judicial notice of certain irrelevant information; and (3) moves to supplement 

the record. Lenders will address each point respectively. 

 

1

 The Lenders, the defendants in this action, are as follows: Commerzbank AG, ABN AMRO Inc., Australia and 

New Zealand Banking Group Limited, Barclays Bank PLC, BNP Paribas, Credit Lyonnais, Danske Bank, ING 

Bank, Intesa San Paolo (formerly known as Banca Intesa), and the Royal Bank of Scotland PLC. 

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1. Motion for Leave to Supplement 

(a) The Supplemental Information is Irrelevant to the Court’s Determination 

MCAR and Mirant have manufactured a scenario where a Class 3 claim was not paid in 

full using a settlement with Mirant’s former parent company. The Court should not permit 

MCAR to present this contrived settlement as evidence that Mirant’s unsecured creditors were 

not paid in full. 

According to MCAR, on July 7, 2010, just days after MCAR filed its response to 

Lenders’ Objections to the Bankruptcy Court’s Proposed Findings of Fact and Conclusions of 

Law, Mirant and Southern entered into a settlement, resolving substantially all disputes between 

Mirant and Southern. See Motion ¶10. MCAR conveniently fails to disclose that the Southern 

Company was not just another creditor, but was Mirant’s former parent company. In late 2000, 

the Southern Company decided to spin-off the power generation aspect of its business which 

resulted in the formation of Mirant. Indeed, the very contract with General Electric that was 

financed by the Lenders was executed while Mirant was still a subsidiary of Southern. Mirant 

operated independently for less than 3 years until July 14, 2003 when it sought bankruptcy 

protection. As a result of the bankruptcy, Southern and Mirant made numerous claims and 

accusations against each other. Southern had provided millions of dollars in start-up capital to 

Mirant and sought to recover those funds in the bankruptcy proceeding. Mirant asserted claims 

that Southern under-capitalized Mirant after the spin-off which Mirant claimed was a primary 

factor in Mirant’s eventual decision to seek bankruptcy protection. Some of these claims 

resulted in settlements, such as last year’s settlement of the lawsuit prosecuted by MCAR against 

Southern in the Northern District of Georgia, while many of Southern’s claims remained 

unresolved until the July 7 settlement MCAR references above. 

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In April 2010, Mirant announced that it would be merging with RRI Energy to form a 

new corporation, GenOn Energy. See Mirant 8-K filed April 12, 2010. As part of this merger, 

Mirant attempted to settle pending and potential claims, including those claims by and against 

Southern surrounding the creation of Mirant.2

 During Mirant’s bankruptcy proceeding, Southern 

filed approximately 340 proofs of claim, for more than $80 million, against Mirant and related 

entities, including a proof of claim, no. 8285, in the amount of $48,983,611.79. See Motion ¶9, 

n. 8. 

As part of this settlement agreement, Southern agreed to forfeit most of its numerous 

claims against Mirant and related entities while Mirant gave up claims that it had against 

Southern. Southern and Mirant agreed to allow Southern’s claim no. 8285, which was a Class 3 

claim, in the reduced amount of $8,552,283.53. See Southern 9019 Motion (Bankr. Dkt. 

No. 16080). Based on the arrangement, Southern knew that it would receive approximately 1 

share of Mirant stock for each $22.80 of its claim, or 375,168 shares of Mirant stock. At its 

present value of $10.04, that results in a recovery of approximately $3,766,686. Southern also 

received a cash distribution of $68,939 for its Class 3 claim, which was essentially a return of 

some of the cash Southern paid to resolve its litigations with MCAR. MCAR relies on this 

amount as evidence that Southern was not paid in full. See Motion ¶22. 

This manufactured settlement is not evidence that creditors were not paid in full as 

MCAR suggests. Southern knew what its recovery would be when it made the decision to settle 

its claims. It chose to forfeit its other claims and take what it knew to be a partial recovery on its 

Class 3 claim in return for releases by Mirant. As part of the settlement, Mirant used Southern’s 

 

2

 Coincidentally, Mirant indicates in its Agreement and Plan of Merger, filed with the SEC on April 12, 2010, that 

“there are no actions, suits, inquiries, investigations or proceedings pending (or, to the knowledge of Parent, 

threatened) against or affecting Parent or any of its Subsidiaries, or any of their respective properties at law or in 

equity . . . .” Section 4.11(b). Mirant did not disclose in its Agreement and Plan of Merger Southern’s claims 

against Mirant. Nor did it disclose Lenders’ potential 502(h) claims. 

Case 4:06-cv-00013-Y Document 56 Filed 10/27/10 Page 4 of 10 PageID 1374
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claim to create a creditor that would not be paid in full. This unpaid creditor status was purely a 

manufactured result. 

MCAR, throughout its objections to the Bankruptcy Court’s proposed findings, relied on 

the premise that creditors were not paid in full. See MCAR’s Objections (Adv. P. Dkt. No. 279). 

Despite these allegation, Lenders have clearly demonstrated that, in fact, all of the creditors were 

paid in full as of the effective date of Mirant’s Plan of Reorganization (the “Plan”) when they 

were issued shares of New Mirant stock. See Lenders’ Response (Adv. P. Dkt. No. 302) at 13-15 

(discussing how creditors were paid in full through stock distribution on the effective date).3

 

Those creditors that received distributions after the effective date of Mirant’s Plan either 

received stock distributions when the price was higher than when it was offered on the effective 

date or they received cash in the full amount of their claims. See Lender’s Response at 15-16. 

As demonstrated in the Lenders’ Response, MCAR’s attempt to have a floating determination 

date for the value of Plan distributions is flawed. Moreover, the claims that MCAR pointed to in 

its objections were actually paid in full. Faced with this revelation, MCAR needed to 

manufacture a creditor that Mirant would have paid less than the full amount of its claim. This 

last minute settlement is wholly irrelevant to the issues before the Court. As pointed out by 

MCAR’s responses to Lenders’ objections, Southern’s $49 million claim was still outstanding 

when Lenders’ briefed their objections and responses. See Motion ¶5. After Lenders definitely 

proved that every creditor was paid in full, Mirant negotiated a settlement to create a situation 

where a creditor of a Class 3 claim would submit a claim and only recover a percentage of that 

claim. 

 

3

 The Lenders’ Response is Defendants’ Response to MC Asset Recovery’s Objections to Proposed Findings of Fact 

and Conclusions of Law with Respect to Defendants’ Motion to Dismiss Plaintiff’s First Mended Complaint and 

Brief in Support currently part of the record before the Court. 

Case 4:06-cv-00013-Y Document 56 Filed 10/27/10 Page 5 of 10 PageID 1375
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If the Court permits MCAR to supplement and add evidence regarding Southern’s claim 

and distribution, Lenders request that, in order to investigate the circumstances of this contrived 

settlement, they be permitted to take limited discovery as to the terms and negotiation of the 

settlement agreement. 

(b) The Supplement was Previously Addressed in MCAR’s Filings 

MCAR previously addressed the issues surrounding Southern’s claim in its response to 

Lenders’ objections, where it identified that Southern had filed a claim and that it was likely 

Southern would receive less than the full amount of its claim. In its current brief, MCAR 

concedes that it previously “addressed the fact that a large outstanding claim against Mirant 

existed as of the time of the filing of its objections to the Proposed Findings.” Accordingly, the 

information provided in MCAR’s supplement is redundant to that already provided in its 

voluminous submissions to the Court. 

(c) MCAR’s Reliance on Bankruptcy Rule 9033(d) and Civil Rule 15 Is 

Misplaced 

In support of its argument that it should be permitted to supplement its Objections and 

Responses filed months earlier, MCAR relies on Bankruptcy Rule 9033(d) and Civil Rule 17. 

Bankruptcy Rule 9033(d) provides that when reviewing a bankruptcy court’s proposed 

findings of fact and conclusions of law in non-core proceedings, the “district judge may accept, 

reject or modify the proposed findings of fact or conclusions of law, receive further evidence, or 

recommit the matter to the bankruptcy judge with instructions.” Despite Bankruptcy Rule 9033 

providing no means for MCAR to supplement its objections and responses filed several months 

ago, MCAR attempts to use the Court’s ability to seek additional evidence if it deems it 

necessary as a basis for MCAR to file its irrelevant supplement. The Court should only accept 

additional evidence if it deems such evidence necessary to decide the issues before the Court. 

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Here, the Court has not requested nor, the Lenders respectfully submit, does it need the 

information MCAR is attempting to provide. As such, MCAR’s reliance on Bankruptcy Rule 

9033 is misplaced. 

MCAR also attempts to rely on Civil Rule 15 which permits the Court to allow a party to 

amend a pleading, i.e. a complaint. Civil Rule 15 does not address amendments to motions, 

briefs, or objections. Again, MCAR’s reliance is misplaced, and the Court should give no 

credence to the Civil Rule 15 analysis. 

Even if the Court were to apply Civil Rule 15 to the issue of whether a party should be 

permitted to supplement objections to bankruptcy objections and responses, MCAR still fails to 

satisfy the requirements established in the Fifth Circuit. As identified by MCAR, the Court 

should not permit amendment when it: (1) causes undue delay; (2) prejudices the non-movant; 

(3) is motivated by bad faith or dilatory motives; (4) is futile; and/or (5) should have been 

resolved by prior attempts to amend. Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998). 

As discussed previously, the supplement is irrelevant to the issues before the Court, and thus 

amendment or supplement is futile. Allowing such a “supplement” begs the question of whether 

MCAR will have to supplement its pleading each time a claim is allowed. Furthermore, MCAR 

previously included information in its objections and responses about the claims by Southern. 

Not only should this supplement have been resolved by prior attempts to amend, but MCAR had 

already included the substance of the “new” information in its previous filings. Hence, the issue 

was actually addressed, and thus resolved, prior to the proposed submission of this 

“supplement.” 

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2. Request for Judicial Notice 

MCAR requests the Court take judicial notice of two filings in Mirant’s bankruptcy 

proceeding and Mirant’s stock price on the New York Stock Exchange pursuant to Fed. R. Evid. 

201. As explained in detail previously, the 9019 Motion (Bankr. Dkt. No. 16080), the Order 

Approving Settlement (Bankr. Dkt. No. 16090), and Mirant’s stock price are irrelevant to any 

determination of Lender’s Motion to Dismiss. Relevance, however, is not a factor to consider 

when a party requests the Court to take judicial notice, and the Court may take judicial notice of 

the information. Indeed, the Court is free to take judicial notice of Mirant’s stock price on every 

date from the date of issue through the date hereof. Accordingly, Lenders do not oppose the 

Court taking judicial notice as requested by MCAR but instead highlight the lack of relevance 

these stock prices have to the issues before the Court. 

3. Motion to Supplement Record 

With respect to MCAR’s Motion to Supplement the Record, Section III of its brief, 

Lenders are unsure how this request differs from that presented in Section I. Both request the 

same relief, leave to supplement the record. Accordingly, Lenders oppose this relief for the 

previously stated reasons and reserve the right to respond to the substance of MCAR’s 

Supplement until such time as the Court permits MCAR to file its Supplement. In addition, 

because MCAR filed an affidavit in support of its position and requests that such affidavit 

become part of the record, in the event that the Court grants the Motion, Lenders request 

permission to take appropriate discovery in response to the Supplement, including the deposition 

of Jay Wilson, who submitted an affidavit as part of MCAR’s Supplement. 

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CONCLUSION 

For the foregoing reasons, Lenders request that the Court deny MCAR’s Motion. 

Dated: New York, New York 

 October 27, 2010 

 Respectfully submitted, 

 

By: s/J. Mark Chevallier

J. Mark Chevallier 

MCGUIRE, CRADDOCK & STROTHER, P.C 

State Bar No. 04189170 

2501 North Harwood, Suite 1800 

Dallas, Texas 75201 

Telephone: (214) 954-6800 

Facsimile: (214) 954-6850 

 Hugh M. McDonald 

 Keith C. Nusbaum 

 SNR DENTON US LLP 

 1221 Avenue of the Americas 

 New York, New York 10020 

 Tel: (212) 768-6700 

 Fax: (212) 768-6800 

 Hugh.Mcdonald@snrdenton.com 

 Keith.Nusbaum@snrdenton.com 

Co-counsel for Commerzbank AG, ABN AMRO Inc., 

Australia and New Zealand Banking Group Limited, 

Barclays Bank PLC, BNP Paribas, Credit Lyonnais, 

Danske Bank A/S, ING Bank, Intesa San Paolo 

(formerly known as Banca Intesa), and The Royal 

Bank of Scotland PLC 

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CERTIFICATE OF SERVICE

 I hereby certify that on October 27, 2010, I served the Memorandum of Law in 

Opposition to Plaintiff MC Asset Recovery LLC’s Motion for Leave to File Supplement, 

Request for Judicial Notice and Motion to Supplement the Record through Notice of Electronic 

Filing on all counsel of record. 

Dated: New York, New York 

 October 27, 2010 

By: s/J. Mark Chevallier

 J. Mark Chevallier 

Case 4:06-cv-00013-Y Document 56 Filed 10/27/10 Page 10 of 10 PageID 1380