Calpine unsecured creditors object to assumption of 250-plus gas and power trading contracts

By Caroline Salls

Pittsburgh, Feb. 8 - Calpine Corp.'s official committee of unsecured creditors objected to the company's request to enter into and assume more than 250 pre-bankruptcy gas and power trading contracts and pledge collateral under pre- and post-bankruptcy trading contracts, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the objection, the committee said that while it understands the company's need to transact business and buy and sell natural gas and power, it believes assumption of more than 250 pre-bankruptcy trading contracts and entry into new trading contracts at this early stage of Calpine's restructuring efforts lacks foresight.

The committee recommended implementation of a protocol limiting the company's exposure under the contracts until Calpine and the committee have had an opportunity to either ratify the current risk management policies for Calpine Energy Services, LP, the party to substantially all of the 250 contracts the company seeks to assume, or implement new risk management policies for CES.

The committee said it also wants to confirm that the contracts do not relate to any projects or facilities that Calpine intends to close or mothball.

According to the objection, Calpine and the committee have been working to determine whether the contract assumption is appropriate.

However, based on the sheer size of Calpine's cases and the many legal, financial and operational issues faced by its estates, the committee said it is not a position to determine on an independent basis whether assumption of contracts or entry into new contracts that give the company the right to engage in speculative trading is in the best interests of Calpine's estates and its unsecured creditors.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20. Its Chapter 11 case number is 05- 60200.

© 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.