Attorneys pack courtroom for first EFH bankruptcy hearing
05/01/2014 11:51 AM
05/01/2014 11:59 AM
Energy Future Holdings asked a judge today to set a June hearing on approval of a loan that would be used to fully repay some creditors of a unit of the bankrupt Dallas-based power provider.
It took three courtrooms to accommodate the lawyers, advisers and observers gathered for the first hearing in the huge bankruptcy case.
Company attorney Stephen Hessler told U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Del., that the company will use a $5.4 billion loan to “promptly repay” about $4 billion in principal owed to senior lenders of the Energy Future Intermediate Holding unit and a second, $1.9 billion loan to do the same thing with lower-ranked creditors.
Those creditors will then have the option to either settle for a lower amount any early-payoff fee they may be owed, or fight Energy Future in court over the so-called make-whole claims. The company said it doesn’t owe any make-whole payments.
EFH, taken private in a record $48 billion leveraged buyout in 2007, filed for bankruptcy on Tuesday after falling natural gas prices pulled down electricity rates in Texas and wiped out half its revenue. It listed $49.7 billion in liabilities, the most ever for an energy-industry bankruptcy.
The power provider is seeking permission from Sontchi to keep paying employees and key vendors while it reorganizes about $40 billion in debt under a plan negotiated with senior lenders. More than 60 percent of Fortune 500 companies are incorporated in Delaware, which gives them access to the state and federal courts there.
Second-lien noteholders owed about $1.6 billion say the fact that a unit of EFH is incorporated in Delaware isn’t enough to keep the case in Wilmington. They want the proceedings moved to Texas, where EFH does all its business, has all its operations and is overseen by state utility and environmental regulators.
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