Aurelius and Elliott say this is a case of the pot calling the kettle black, alleging in court papers that Citibank took steps before the bankruptcy on behalf of the secured lenders.

Starting in 2014, the coal company, a client of Citibank’s leveraged finance group since 2000, asked the bank for relief on a loan made in 2013. Citibank eventually granted it, a move that Aurelius and Elliott estimated benefited secured lenders by $455 million.

In recent weeks, court filings suggest that Elliott and Aurelius are taking no chances. As of Sept. 12, Aurelius cut its stake in Peabody’s unsecured debt to $165 million from the $235 million it had owned as of May 17. And, along with Elliott, it increased its position in the secured debt, seemingly hedging their bets if things don’t go their way.

This article was provided by Bloomberg News.
 

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