Energy Future Holdings must try mediation before starting court fight
Energy Future Holdings must go into mediation with creditors over their $11 billion alternative proposal before scheduling a court fight to decide on the power company’s own bankruptcy-exit plan, a judge ruled.
U.S. Bankruptcy Court Judge Christopher Sontchi on Monday sided with a dissident group of creditors who want to put off preparations for a three-week trial and focus on mediation.
The Dallas-based company and lower-ranking creditors of its money-losing electric-generating business have been trying to negotiate a deal to reorganize the company’s debt. The creditors have threatened to sue EFH while the company has proposed a plan that would impose bigger losses on the group than they say they’re willing to accept.
Delaying the start of trial preparations would keep the two sides focused on trying to make a deal during mediation, Sontchi said.
“I think it is appropriate to let that play out a little bit,” Sontchi said in bankruptcy court in Wilmington, Delaware.
The trial, scheduled to run three weeks, would begin in November and decide whether EFH’s reorganization plan should be imposed on lower-ranking creditors over their objections. That plan would settle potential lawsuits against EFH for about $800 million, which the dissident creditors say is too low.
Energy Future Holdings filed for bankruptcy last year hoping to restructure $42 billion in debt, in part by selling its profitable stake in Oncor Electric Delivery, Texas’s largest power transmission company, and imposing reduced payments to lower-ranking creditors. The company also owns Luminant, the electricity-generating division, and retail provider TXU Energy.
The creditors say they have a plan that would reorganize Energy Future in part by raising $11 billion in debt and equity.
The company has been taking bids for Oncor. Last month, its CEO told reporters that the unit’s value exceeds $10 billion.
This story was originally published May 4, 2015 at 5:07 PM with the headline "Energy Future Holdings must try mediation before starting court fight."