Bankrupt Energy Future Holdings' novel plan to sell itself through a loan provision has Texas's largest power company in hot water with creditors, who accuse it of trying to skirt a public sale process and hiding its true value, Reuters reported yesterday. The company and its creditors are heading for a courtroom showdown on Monday when Energy Future will seek a judge's approval to take on a $2 billion loan that would give a group of hedge fund lenders 60 percent of the company when it emerges from its $48 billion bankruptcy. Other creditors have cried foul, saying that Energy Future hasn't considered competing offers and is selling itself without a traditional court-supervised bankruptcy auction. Creditors have estimated Energy Future has a total enterprise value, which includes debt, of $21 billion thanks to its EFIH unit, which owns Texas's biggest power lines operator, Oncor.The fight centers on EFIH's plan for a debtor-in-possession loan that would refinance high-yielding notes. Energy Future can consider alternate transactions, but creditors said once the loan is approved restrictive provisions will deter any potential bidders. John Penn, a bankruptcy attorney at Perkins Coie in Dallas, who is not involved in the case, said the judge has flexibility to decide what to with the assets if he rejects the company proposal on Monday. "Sometimes it becomes a formalized process with bid procedures and other times you just have the competing parties show up in court with their offers and each makes their pitch," said Penn.
