Bank of New York Mellon Corp. asked a judge to reject ChesapeakeEnergy Corp.'s bid for an emergency order allowing it to redeemmore than $1.3 billion in notes early without paying new interest,saving about $400 million.

Investors holding $250 million in debt echoed the bank's requestas they sought to intervene. A hearing is set for later today inthe suit, in which Chesapeake seeks a ruling that it can still meeta March 15 deadline to redeem the 6.775 percent notes at par, andnot the higher “make whole” price.

“Chesapeake, having missed the deadline to redeem the notes atpar, now demands an advisory opinion from the court, seeking toguarantee the idiosyncratic treatment of a future redemption noticewhich has not yet been made,” BNY Mellon, the indenture trustee forthe notes, said in a filing today in Manhattan federal courtopposing the request.

The notes, issued in February 2012 and due March 2019, werepushed by traders to a record 105.9 cents on the dollar on the daythe suit was filed, a signal traders may believe the OklahomaCity-based company would have to pay a premium to call thedebt.

Chesapeake, the second biggest natural gas producer in the U.S.,argued it has until March 15 to issue a formal notice that it willredeem the notes early, while Bank of New York Mellon said theearly redemption would need to be completed by that date to avoidthe make-whole provision that would include paying interest.

In its filing today, Bank of New York Mellon argued Chesapeakeisn't in danger of “irreparable harm” in the case, citing astandard for obtaining such an injunction, because the energycompany can seek money damages if it wins and won't sufferpermanent damage. The bank also said Chesapeake can't prove it hasa likelihood of success — another requirement.

Bank of New York Mellon initially supported Chesapeake's planwhen the energy company first discussed early redemption with thebank on Feb. 20, according to the complaint. Two days later, thebank changed its mind, Chesapeake said.

In a separate court filing today, several investors, callingthemselves an “ad hoc noteholder group,” asked court permission tointervene in the litigation — a status that would allow them toattend hearings and file papers in the case.

Investor Group

They include Archer Capital Management LP, Ares Management LLC,Aurelius Capital Management LP, Carlson Capital LP, Cetus CapitalLLC, Latigo Partners LLC, Monarch Alternative Capital LP, P.Schoenfeld Asset Management LP, River Birch Capital LLC and TaconicCapital Advisors LP.

“If Chesapeake chooses to issue a notice of redemption, it mustlive with the consequences of the terms in the indenture, and thecourt should not create a right that does not exist,” thenoteholders said in their joint filing.

The group, whose outstanding notes are worth a total of about$250 million, argues Chesapeake seeks to “rewrite” the redemptionprovisions of the indenture. The noteholders called the requestedinjunction “drastic” and again cited a lack of irreparable harm toChesapeake.

“There is no business to save, no reputation to protect, nounique contractual right to enforce,” the noteholders said in thefiling. “This case indisputably is about money and money only. And,as such, there is no irreparable harm.”

Michael Kehs, a spokesman for Chesapeake, declined to comment onBank of New York Mellon's filing.

Bank of New York Mellon “fails to distinguish the differencebetween a deadline for when notice must be given, and when theredemption date — the date on which payment is actually made tonoteholders — occurs,” Chesapeake said in its complaint. “This isnot a typical contractual dispute where one party's misreading ofan agreement can be remedied after the fact.”

Chesapeake's 2019 securities yielded 5.61 percent, or 552 basispoints more than comparable-maturity Treasuries, yesterday,according to Trace, the bond-price reporting system of theFinancial Industry Regulatory Authority. The 6.775 percent couponon those bonds is 50 basis points higher than the average weightedcoupon on all the company's outstanding debt, according to datacompiled by Bloomberg.

The case is Chesapeake Energy Corp. v. The Bank of New YorkMellon Trust Co., 13-cv-01582, U.S. District Court, SouthernDistrict of New York (Manhattan).

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