A bankruptcy judge yesterday authorized creditors to begin voting on Energy Future Holdings Corp.’s chapter 11 exit plan after the Texas power giant flip-flopped on a deal with senior lenders, the Wall Street Journal reported today. In a flurry of action in the final days of 2016, Energy Future walked away from a peace pact with its top-ranking lenders and cut a new deal with junior bondholders York Capital Management Global Advisors LLC, GSO Capital Partners LP, Avenue Capital Management and Angelo Gordon & Co. The new deal is supposed to ensure Energy Future gets out of bankruptcy quickly. However, it raised hackles in the ranks of senior lenders, major investment funds that had expected to collect nearly $800 million in premiums in addition to payment in full on their loans under a litigation settlement. Instead, they will get what they are owed on the loans but have to continue a court fight if they want to collect the premiums. Bankruptcy Judge Christopher Sontchi yesterday found that Energy Future had given voting creditors enough information to make up their minds on whether to support the latest version of its often-revised chapter 11 plan. Read more. (Subscription required.)
Make sure to read the cover article of the January ABI Journal, “Possible Makeover for Make-Wholes After EFH Decision.”
