(Adds background on the bankruptcy case)
By Nick Brown
NEW YORK, June 18 (Reuters) - Nextel’s bankrupt Latin American arm gained U.S. court approval on Thursday of a plan to exit Chapter 11 bankruptcy under the control of bondholders including Aurelius Capital Management, the company’s lawyer said.
NII Holdings, a telecom operator for the Nextel brand in Brazil, got approval for the contested $4.35 billion turnaround plan from Judge Shelley Chapman in Manhattan bankruptcy court, concluding a trial that began earlier this month, NII attorney Scott Greenberg said in an email on Thursday.
The plan, which will cede control to Aurelius and other holders of $4.35 billion in bonds, is based on a series of settlements of complex legal disputes over the validity of inter-company transfers.
While most creditors supported the deal, a bondholder subset known as the CapCo group called it a sweetheart deal for Aurelius that reduced CapCo’s payout by $150 million -- more than a third of its total recovery.
CapCo, which wanted Chapman to reject the deal, alleged some of the claims resolved by the settlement were invalid in the first place, so Aurelius shouldn’t have been entitled to the extra equity stake it received on account of them.
In CapCo’s view, NII was a doormat, letting Aurelius and other deep-pocketed bondholders negotiate the deal themselves. But NII Chief Executive Officer Steven Shindler testified to the contrary during the trial which began on June 3, saying he was “never shy about expressing our view.”
In one of the more colorful pieces of evidence to surface in a bankruptcy trial, a lawyer for NII presented an email in which Shindler railed against some of Aurelius’ demands. “My blood does not boil over too often, but I am there and ready to unleash the fury,” Shindler wrote.
NII filed for Chapter 11 last September, later selling its Mexican assets to AT&T Inc for $1.9 billion.
Aurelius has a reputation for aggressive bankruptcy litigation, and spent years pursuing costly lawsuits in media company Tribune Co’s bankruptcy. (Reporting by Nick Brown; Editing by Richard Chang and Alan Crosby)