Lincoln Power files plan; disclosure statement hearing set for June 21

By Sarah Lizee

Olympia, Wash., May 17 – Lincoln Power, LLC filed a Chapter 11 plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Lincoln Power started its Chapter 11 cases with a restructuring support agreement that allows the company to pursue either a restructuring centered around a debt-to-equity swap or a sale of its assets.

Later, the company decided that an asset sale is the best available method for maximizing the value.

The debtors, with the assistance of Guggenheim Securities, LLC, will continue to market the debtors’ assets to potential buyers through the June 20 bid deadline.

While the marketing process has been ongoing, the debtors have also been negotiating a settlement agreement with PJM Interconnection, LLC and PJM Settlement, Inc., removing what would have otherwise been a significant impediment to an orderly and swift sale transaction, Lincoln said.

The debtors want to implement the sale transaction through the plan and, as such, are proposing that the approval of the disclosure statement and confirmation of the plan run in parallel with their marketing and sale process.

Creditor treatment under plan

General administrative claims, professional fee claims, priority tax claims, other secured claims and other priority claims are unimpaired under the plan.

Holders of first-lien claims will receive, in the event the purchaser is not a newly-formed lender entity, a pro rata share of cash held by the obligor debtors after the sale closes, less cash to be distributed to holders of claims on the effective date and a cash reserve.

In the event the purchaser is a lender entity, holders of first-lien claims will receive their pro rata share of new common equity and takeback debt, if applicable. Holders will also be given the right of first refusal to participate in an exit facility, if the required consenting lenders determine the facility should be entered into, on a pro rata basis.

Holders of general unsecured claims against non-obligor debtors will receive cash and are unimpaired by the plan.

Holders of general unsecured claims against obligor debtors are impaired and will receive their pro rata share of a cash pool.

Section 510(b) claims, intercompany claims, intercompany interests and existing interests will be canceled with no distribution.

The disclosure statement approval hearing is scheduled for June 21.

Only holders of first-lien claims and general unsecured claims against obligor debtors will be allowed to vote on the plan.

The Charlotte, N.C.-based power company owns two gas-fired power-generation facilities in Illinois. The company filed Chapter 11 bankruptcy on March 31 under case number 23-10382.

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