This Tom Fowler/Chronicle article reports on a retired commercial painter from Ohio is engaging in a rather novel protest of the absolute priority rule, the bankruptcy principle that prevents shareholders from receiving any value under a bankruptcy plan unless creditors either are paid in full or agree that the shareholders can receive something:
Calpine Corp.’s emergence from bankruptcy protection in the coming days will end a tough chapter in the history of Texas’ No. 3 power producer, but don’t expect applause from shareholder Robert Strouse.
The retired commercial painter from Ohio likely will continue his vigil in front of the company’s downtown Houston offices where he’s been protesting the bankruptcy plan for the past two weeks.
“They’d like me to go away, but I’m going to hang on as long as I can,” said Strouse, 62.
Strouse claims the company misled him about the price he could expect for his stock when Calpine emerges from bankruptcy ó a charge the company denies. [. . .]
Strouse said his quarrel with Calpine began last month after a phone conversation with an investor relations official. He said he was told his 5,000 shares probably would be valued at about $1.60 each under the company’s reorganization plan. That’s a far cry from the $5.12 each he paid for them in March 2004, but better than nothing, he figured, so he voted in favor of the plan.
The plan that came out of the bankruptcy court in December, however, wasn’t what he expected. It will cancel outstanding shares of common stock like his and replace them with warrants ó the right to purchase new Calpine stock ó but at a price likely higher than that at which the stock will begin trading.
“They lied to me, plain and simple,” Strouse said.