The U.S. government's bankruptcy watchdog blasted an agreement aimed at bringing Energy Future Holdings out of chapter 11 because it requires Texas's biggest power company to pay millions of dollars in fees to lawyers, according to a court filing, Reuters reported yesterday. Energy Future Holdings struck a "plan support agreement" in August that binds key parties to work together to end the contentious bankruptcy, which began in April 2014. The support agreement is aimed to preventing pitched legal battles if the current bankruptcy exit proposal, based on the sale of the Oncor power distribution business, fails. However, the plan support agreement also requires Energy Future's creditors "to vote in favor of a plan that provides for millions of dollars (and possibly billions)" for 45 professionals working for undisclosed parties, according to the U.S. Trustee. Energy Future's bankruptcy exit plan also contains "illegal provisions," according to the U.S. Trustee, including a management incentive plan and legal settlements. Energy Future said in a separate court filing that the objectors to the plan support agreement were misreading the document, which the company said allowed it to pursue any proposed deal that was more favorable to creditors. Under the bankruptcy exit plan, a group of investors including an affiliate of Hunt Consolidated Inc. will finance a $12.2 billion deal that will give them control of Energy Future's Oncor power distribution business. The plan has the support of creditors on Energy Future's generation and retail utility side of its business, while paying off creditors on the Oncor side.
