A bankruptcy judge on Thursday granted approval for an Invenergy-backed power plant to use cash pledged as lender collateral to continue operating under chapter 11, despite opposition from an NRG Energy Inc. unit with a large unsecured claim, WSJ Pro Bankruptcy reported. Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del., granted permission in a bench ruling for Invenergy’s Ector County Energy Center LLC to use cash collateral from its secured lenders and rejected objections from NRG’s Direct Energy Business Marketing LLC. Ector, located in Goldsmith, Texas, has proposed selling itself out of chapter 11 to partially pay down more than $400 million in secured debt. Owner Invenergy is the primary borrower on those loans, which are guaranteed by affiliated entities including Ector. Shortly before Ector’s bankruptcy filing in April, Invenergy amended its credit agreement with the secured lenders to make Ector directly responsible, Direct Energy said. Judge Dorsey disagreed, saying that the loan agreement, even before the amendment, put Ector on the hook and that its use of its lenders’ cash collateral will help protect their interests by allowing Ector to continue its operations while in bankruptcy. The judge also approved Ector to continue operating under a shared service agreement with affiliates that provides it with employees for its Texas facility. Ector has said the bankruptcy is expected to make a $75 million dent in its debt pile while addressing more than 100 lawsuits stemming from the extreme winter storm that hit Texas in February 2021.
