Ruling on Energy Future bankruptcy exit plan set for Thursday
Dec 2 The U.S. judge overseeing the Energy Future Holdings Corp bankruptcy will announce on Thursday morning whether he will approve a Chapter 11 exit plan for the company, Texas's biggest power company, the judge said on Wednesday.
"I will read it into the record. It will take a little time, so wear something comfortable," said U.S. Bankruptcy Judge Christopher Sontchi at the end of five hours of closing arguments.
Sontchi must consider whether the plan by Energy Future is fair to creditors. Under the plan, Energy Future will sell its Oncor power distribution business to a consortium led by Hunt Consolidated. That deal has been valued at $19 billion.
Energy Future's power plants and retail utility will be spun off to senior creditors, which are owed $24 billion.
The company has been slowly winning over creditors, and by the end of a weeks-long trial that ended last week only a few objections remained.
The U.S. Trustee, a bankruptcy watchdog with the U.S. Department of Justice, objected to the payment of some legal fees in the plan and opposed the way the plan protected some parties from lawsuits.
A lawyer who represents people who have sued Energy Future for asbestos injuries also opposed the exit plan.
"In my 30 years, it's probably been the most exceptional case I've been involved in," Richard Schepacarter, an attorney for the U.S. Trustee, told the court during closing arguments on the plan.
Energy Future filed one of the biggest-ever bankruptcies in early 2014 and spent 18 months waging expensive legal fights with diverse groups of creditors over a wide range of disputes.
The company entered bankruptcy dogged by weak power prices that left it unable to support its $42 billion in debt. Much of that debt was taken on in a $45 billion leveraged buyout of TXU Corp in 2007 that created Energy Future. The buyout was led by KKR & Co, TPG Capital Management and the private equity arm of Goldman Sachs.
Energy Future still has a ways to go before it actually exits bankruptcy. Regulators must approve the new owners of the power plants, and tax authorities must approve Hunt's plan to fold Oncor into a real estate investment trust.
Energy Future is also locked in a dispute with a minority investor in Oncor, Texas Transmission Investment LLC that has declined to sell to the Hunt-led consortium. (Reporting by Tom Hals; Editing by Steve Orlofsky)
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