Ector County Energy plan confirmation hearing set for Dec. 21

By Sarah Lizee

Olympia, Wash., Nov. 17 – Ector County Energy Center LLC’s hearing on confirmation of its recently amended Chapter 11 plan has been scheduled for Dec. 21, according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The plan provides for the distribution of about $150 million in proceeds from a going-concern sale of the debtors’ operating assets to holders of allowed claims.

Some consenting lenders agreed to forego their entitlement to receive 100% of the proceeds of their collateral until the full $340 million balance of the prepetition term lender claims were paid and instead capped their recovery toward that claim at $75 million.

As a result of that cap, in excess of $65 million that the prepetition secured lenders could otherwise have claimed entitlement to will be distributed to priority and general unsecured creditors of the debtor.

Among the conditions to that cap is that both the prepetition secured lenders and the co-obligors for the prepetition term lender claims receive protection against post-effective date litigation risk, requiring that the prepetition secured lenders, and Invenergy Thermal Operating I LLC (ITOI) receive releases of all claims that could be brought by the debtor directly or by those pursuing litigation rights of the debtor derivatively.

Those proposed release provisions were initially challenged by Direct Energy Business Marketing, LLC, the holder of an asserted claim in the amount of roughly $403 million, and the debtor disputed the amount of the claim.

But after a two-day mediation, a global settlement was reached, under which Direct Energy will receive a distribution of up to $63 million.

It also enables other holders of allowed general unsecured claims to receive payment in full on a plan effective date that is projected to occur earlier than previously expected, now that the settlement has been reached, the debtor said.

As a result of the global settlement, Direct Energy will also be deemed a “released party” under the plan.

Following the effective date, the debtor will remain in existence to make the distributions required under the plan and to close the Chapter 11 case, with a plan-appointed distribution agent overseeing those processes.

Distributions will start on the effective date and at various intervals following the effective date as disputed claims are adjudicated and funds held on reserve released to pay those claims.

According to the disclosure statement, administrative expense claims, priority tax claims, other priority claims and other secured claims will be paid in full.

Holders of affiliate, insider and intercompany general unsecured claims will receive a pro rata distribution of any amounts available after payment of senior classes.

Equity interests will be canceled, but holders will have distribution rights to the extent all other claims are paid in full with interest at the legal rate.

Goldsmith, Tex.-based Ector owns and operates a 330 MW natural gas-fired electricity-generating facility. The company filed Chapter 11 bankruptcy on April 11, 2022 under case number 22-10320.

© 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.