Rarely do investors get a chance to have a say on bankruptcy proceedings a move that over the years has led to most of them losing a big chunk of their investments, if not all. However, that is slowly changing as shareholders in the energy, coal and other commodities sector move to make their voice heard. Shareholders of Horsehead Holding Corp. (OTCMKTS:ZINCQ) are among a bunch of investors looking to recoup a substantial amount of their investments as the company battles Chapter 11 in the industry.
Asset Valuation Stand Off
A fierce battle over how the bankruptcy restructuring should proceed has already ensued as Horsehead shareholders accuse the management of lowballing the company’s assets. Since the price of Zinc has risen from lows when the company filed for bankruptcy in February, investors believe the company’s assets should be worth more, than what creditors are quoting.
Investors have also taken the management to task for stating that the company’s assets are worth $280 million yet at the beginning of the year, they were worth more than $1 billion. A KPMG report commissioned by shareholders values the assets at over $1.1 billion another indication of something fishy on the part of the management team valuation.
Class Action Push
Shareholders now fear that the company is planning to let creditors gain control at a bargain price in total disregard of their interest. It appears shareholders will have to turn to class action lawsuits if they are to have a chance of recouping some part of their investments in the company. Under the proposed plan, the Zinc producer is planning to eliminate up to $427 million in pre-bankruptcy debt and emerge out of Chapter 11 under the control of note holders.
A bankruptcy judge rejecting allegations that Horsehead was unfairly wiping out their investment with its restructuring plan means shareholders might have to look elsewhere. A number of law firms led by The Wagner Firm, Lundin Law Pc and have already opened investigations into Horsehead Holding Corp. (OTCMKTS:ZINCQ) providing hope as investors look to prevent their investments from being wiped out.