U.S. Energy nears settlement with shareholder, gets interim approval to use cash collateral

By Rebecca Melvin

New York, Feb. 11 - U.S. Energy Systems Inc. is "very close" to a settlement with 15% shareholder Nakash Energy LLC regarding a lawsuit seeking, among other things, to compel the company to hold a special meeting of stockholders, an attorney for the company told the U.S. Bankruptcy Court for the Southern District of New York on Monday.

A separate settlement with shareholder Asher E. Fogel, former chairman and chief executive, does not appear as imminent.

"You'll probably see pleadings this week," the attorney said following the hearing.

In the absence of firm settlements, the company requested a third adjournment on its motion to enforce the automatic stay subsequent to its Chapter 11 bankruptcy filing Jan. 9.

Fogel, who was fired from the company June 30, along with other supporting shareholders including Nakash, has been attempting to hold a shareholders' meeting to change the configuration of the bankrupt company's board of directors.

The Chancery Court of the State of Delaware has ordered the company to hold a meeting, which has been postponed several times in conjunction with attempts at settlement. A meeting is now scheduled for Feb. 19.

A hearing to approve the settlement is set tentatively for Feb. 21.

Also on Monday, U.S. Energy Systems received an interim order approving the use of cash collateral to pay expenses.

When the energy company filed for bankruptcy, it asked the court for approval to use cash collateral to protect the value of its U.K.-based assets and operations.

The move will ensure that the U.K. subsidiaries will have access to the working capital they need on an ongoing basis to continue operating, the company said at that time.

The U.K. operations have been funded for the past several months through a series of waivers negotiated with U.S. Energy Systems' lenders, including Silver Point Finance LLC, which acquired all of the common stock of subsidiary U.S. Energy Biogas Corp. for $9 million last fall. The letter of intent for that purchase also allowed for an increase in the amount available under the credit and guaranty agreement of $8 million.

A final hearing on the use of cash collateral is set for March 4.

Also approved Monday was U.S. Energy's motion to retain Jefferies & Co. as financial adviser.

U.S. Energy Systems, based in Avon, Conn., owns energy projects including natural gas and cogeneration facilities in the United States and the United Kingdom. Its Chapter 11 case number is 08-10054.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.