Judge Engelmayer yesterday ruled, following a bench trial, that Chesapeake Energy could redeem over $1 billion in notes. The central question was whether Chesapeake was required to complete the redemption in a specified contractual window — effectively requiring the process to begin beforehand — or whether notice in the timeframe would suffice. (For our prior post on the case, click here.) As Judge Engelmayer observed, “[l]ots of money turns on this dispute. Because the 2019 Notes bear an attractive interest rate of 6.775%, redeeming them at par plus interest is, in today’s low-interest-rate environment, far more advantageous to Chesapeake than its other contractual options.” Judge Engelmayer ruled in Chesapeake’s favor, even though the contract language was not perfectly clear: “The Court is . . . presented with a choice between two constructions offered of [the contract provision in dispute]. One (Chesapeake’s) is imperfect but reasonable. The other (BNY Mellon’s) is incoherent and unreasonable. There are no other reasonable constructions . . . .” Judge Engelmayer was also convinced by the extrinsic evidence:
Continue Reading Judge Engelmayer Rules Chesapeake Can Redeem $1 Billion in Notes Early