Cogentrix Lincoln Holdings LLC, an Illinois natural gas plant business owned by Carlyle Group Inc., filed for bankruptcy protection on Friday to get relief from a wholesaler demanding penalties, the WSJ Pro Bankruptcy reported. The company, which generates and sells its energy into wholesale markets run by PJM Interconnection LLC, said it also plans to sue the business partner. Cogentrix Lincoln and first-lien lenders holding more than two-thirds of those loans entered into a restructuring agreement on Thursday that could involve a debt-for-equity swap, as well as a search for a potential buyer for some or all assets, according to filings Friday in the U.S. Bankruptcy Court in Wilmington, Del. Jeff Ingraham, chief operating officer for operator Cogentrix Energy Power Management LLC, told WSJ Pro Bankruptcy that the filing involves only two — Rocky RoadPower LLC and Elgin Energy Center LLC — of the company’s roughly 15 natural gas plants. The plants remain operational and are expected to continue operating throughout the bankruptcy, he said. Cogentrix Lincoln said its financial troubles largely stemmed from winter storm Elliott in late December, when PJM, which serves all or parts of more than a dozen states, called on its members to provide energy for the regional transmission organization to offset the disruption. Two Cogentrix Lincoln plants “failed to meet their performance obligations during the winter storm Elliott,” Justin Pugh, chief restructuring officer, said in a sworn declaration on Friday. As a result, PJM said in February that it would impose penalties totaling $39 million, of which the final invoices are slated to be issued in a week, Pugh said. Cogentrix Lincoln said it has determined that it needs “to file for chapter 11 protection now to obtain a needed breathing spell.”
