Energy Future Postpones Restructuring Hearing
An attorney for Texas' leading power company, the bankrupt Energy Future Holdings, told a court hearing on Thursday that it will delay seeking court approval of a restructuring support agreement that lays a path out of Chapter 11.
At the start of a two-day hearing on a request to move the bankruptcy case to Dallas from Wilmington, Delaware, Edward Sassower said Energy Future will postpone to June 30 from June 6 a hearing to approve its restructuring support agreement, known as an RSA.
The agreement commits the company to meet certain milestones on its way to slash its $42 billion in debt. Creditors wanted more time to study the deal.
"As a result of working to accommodate the unsecured creditors committee timing request ... we will adjourn the RSA assumption motion," Sassower, a partner in Kirkland & Ellis, said at the start of Thursday's hearing.
The plan involves splitting off the subsidiary that owns the Luminant power generating business and TXU Retail, and turning those businesses over to senior creditors in return for forgiving some of the $24 billion they are owed. The plan is opposed by that subsidiary's junior creditors, who also want the case transferred to Dallas.
The plan also proposes that a separate Energy Future subsidiary that owns Oncor, a power transmission business that is not bankrupt, will emerge from bankruptcy under the control of the subsidiary's junior unsecured creditors.
Most of Thursday's hearing focused on the unusual request by Wilmington Savings Fund Society (WSFS), a Delaware-based representative of junior creditors, to move the case to Dallas.
Energy Future filed for bankruptcy in April in Wilmington. The company was burdened by debt stemming from its 2007 record leveraged buyout of TXU Corp, led by KKR & Co, TPG and the private equity arm of Goldman Sachs.
Energy Future has subsidiaries incorporated in Delaware, and there is no dispute it can file in the state's busy U.S. Bankruptcy Court. The court has handled many big bankruptcies with no real connection to the state, such as the Los Angeles Dodgers baseball team.
WSFS argued that the U.S. Bankruptcy Court in Dallas, near Energy Future's headquarters, would better serve parties affected by the bankruptcy.
"All the employees work and live in Texas, not in Delaware. All the assets are in Texas, none in Delaware. All the customers are in Texas, none in Delaware," said Jeffrey Jonas, a partner in Brown Rudnick and an attorney for WSFS.
The company's general counsel, Stacey Dore, testified she chose Delaware because most of the restructuring parties and their advisers were in New York. She said it was cheaper because the company has to pay many of the costs of its creditors.
"Our conclusion was customers would not care where we filed for bankruptcy," Dore said. "We are not changing our customer programs and contracts."
Testimony and argument on the venue dispute is scheduled to continue into Friday.
The case is In re Energy Future Holdings, U.S. Bankruptcy Court, District of Delaware, No. 14-10979
By Tom Hals, Reporting by Tom Hals