Elpida Memory Inc bondholders, opposed to a sale of the insolvent Japanese memorychip maker to Micron Technology Inc, won a court ban on asset sales in the US without prior notice.
US Bankruptcy Judge Christopher Sontchi in Delaware on Tuesday also ordered Elpida to provide a monthly confidential report to the bondholders’ lawyers detailing its assets in the US, including accounts receivables and investment securities.
The ruling followed a complaint from the bondholders on Sept. 17 that Micron made unauthorized transactions. The bondholders, claiming to represent Japanese and international pension funds, have asked the court to halt the planned sale of Tokyo-based Elpida to Micron for ￥200 billion (US$2.5 billion) as part of bankruptcy proceedings.
Elpida sought to file a report under seal about the proceedings in Tokyo District Court, which is also overseeing the company’s bankruptcy. The report was reviewed by lawyers in the US and, according to the bondholders, refers to the unauthorized transactions.
Sontchi ordered Elpida not to sell, dispose of, transfer or grant any interest outside the ordinary course of business in any of the company’s US assets without giving the bondholders 21 days advance written notice or obtaining court approval. The restriction doesn’t extend to Elpida’s affiliates, the judge said.
Micron agreed in July to buy Elpida in a transaction that would help Micron vie with industry leader Samsung Electronics Co while giving it greater control over supply gluts that have caused it to report losses in the last four quarters amid falling prices.