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Texas's biggest power company, Energy Future Holdings Corp., has reached a settlement with the last group of creditors opposed to its chapter 11 plan, increasing the likelihood the plan will be confirmed, Reuters reported yesterday. The company said in court filings on Monday that it had reached settlements with the official creditors committee of Energy Future Holdings, as well as a representative for some junior bondholders. The plan centers around the sale of its Oncor power distribution business, the biggest power distributor in Texas, to a group led by Hunt Consolidated of Texas. That deal has been valued at $19 billion. The committee had opposed the structure of the deal, which they said would allow Hunt to walk away if the deal failed to clear regulatory hurdles. Under the settlement, the committee and bondholders agreed to drop their opposition to Energy Future's plan and the Hunt deal. In return, they would receive some of the interest that has accrued during the bankruptcy.

Walter Energy Inc. is seeking a bankruptcy court’s approval to end employment agreements with its unions and stop funding retiree benefits so it can move ahead with the sale of its Alabama coal operations, the Wall Street Journal reported today. Walter said in court papers filed yesterday that its plan to sell its assets out of bankruptcy is conditioned upon its rejection of collective bargaining agreements that cover more than 800 unionized workers as well as benefit plans for more than 3,000 union and non-union retirees. The coal miner’s lenders, which have stepped forward to acquire Walter’s Alabama operations, say they won’t be bound by union pacts that seek to hold the successors to their terms. Walter Energy says that this should come “as no surprise,” in light of what it calls the agreements’ “onerous” terms. “The debtors suffer from crippling legacy labor obligations, principally in the form of medical benefits and pension obligations, as well as insupportable hourly labor cost,” the Birmingham, Ala.-based Walter said in court papers. A spokesman for one of the affected unions, the United Steelworkers, said the union would fight the request.

Caesars Entertainment Operating Co. (CEOC) and a group of its lenders are seeking to block a creditor group from bringing more lawsuits in the casino company’s litigation-heavy bankruptcy, the Wall Street Journal reported today. CEOC and the senior lenders that have already committed their support for the company’s restructuring filed papers on Friday opposing the official committee of unsecured creditors’ request to bring lawsuits — which the committee says CEOC can’t or won’t bring before the court. In their objections, CEOC and the lenders pointed to the progress they say the company has made in formulating its restructuring plan, as well as a settlement of various legal claims at the heart of the plan.

Investors who pocketed $12.5 billion in the 2007 leveraged buyout of Lyondell Chemical Co. may have to defend lawsuits by Lydondell creditors seeking to claw that money back, according to a federal judge's ruling on Wednesday, Reuters reported yesterday. Billionaire Leonard Blavatnik led the Lyondell leveraged buyout in 2007, but in early 2009 the company filed for bankruptcy. Bankruptcy Judge Robert Gerber ruled on Wednesday that the company’s creditors could continue to pursue their clawback case and denied the defendants' motion to dismiss it. Gerber's 46-page opinion did dismiss allegations of intentional fraud by the defendants.

Bankruptcy Judge Christopher Sontchi yesterday rebuffed an attempt by NextEra Energy Inc. to involve itself once more in Energy Future Holdings Corp's chapter 11 sale of its power distribution business, Reuters reported yesterday. NextEra said in a court filing on Wednesday that it was prepared to close a deal for Oncor, the distribution unit, that it said was superior to a proposed sale at the center of Energy Future's plan to exit from bankruptcy. NextEra had briefly tried to buy Oncor last year. NextEra's filing came in the midst of a weeks-long trial to confirm Dallas-based Energy Future Holdings' plan of reorganization, which is built around a sale of Oncor to Hunt Consolidated of Texas and a group of creditors. That deal has been valued at around $19 billion. Judge Sontchi yesterday made clear he did not appreciate NextEra's filing, which came long after deadlines for objecting to the sale and bankruptcy.

NextEra Energy Inc. yesterday offered to buy Energy Future Holdings Corp.’s Oncor transmissions business, which is slated to be sold to an investment group led by Hunt Consolidated, the Wall Street Journal reported today. The sale of Oncor is at the heart of Energy Future’s $42 billion reorganization strategy, but the company has chosen the Hunt-led group as the buyer. NextEra said that it stands ready to purchase Oncor in a deal that would fully repay creditors of the division that owns the business. Energy Future decided to sell Oncor to Hunt and allied creditors after an auction was called off that would have allowed NextEra to bid against Hunt and others for the rights to the regulated business, a stable, cash-producing piece of the Texas power infrastructure.

Bankruptcy Judge Benjamin Goldgar agreed yesterday to delay a crucial hearing to review Caesars Entertainment Operating Co.’s chapter 11 plan until an independent examiner completes his probe into the casino operator's pre-bankruptcy transactions, Reuters reported yesterday. The decision comes after junior creditor groups and a U.S. Trustee asked the court to reject a request from Caesars, the bankrupt operating unit of Caesars Entertainment Corp., to hold the hearing in late January. Judge Goldgar said that he would not schedule a hearing to approve documents describing the bankruptcy plan, known as a disclosure statement, without knowing when examiner Richard Davis will deliver his report. At the same hearing, Judge Goldgar also said he would probably deny an unusual request by a group of creditors to prevent the Kirkland & Ellis law firm from continuing to represent Caesars. Junior bondholders, represented by Jones Day, allege that Kirkland and Ellis have a conflict of interest and they have accused its partner James Sprayregen of misleading the judge in a previous trial on the issue. Goldgar did permit Jones Day to perform a limited investigation of its allegations, but also said the request to remove Kirkland would probably be denied.

Bankruptcy Judge Christopher Sontchi ruled yesterday that the resigning chief executive of Samson Resources Corp. won’t be paid outright a $760,000 bonus promised as part of his third-quarter compensation package, the Wall Street Journal reported today. Judge Sontchi said that he would allow CEO Randy Limbacher, who is stepping down next month, to have an unsecured claim for the amount of the bonus, but that he wouldn’t allow the company to pay the amount outright in full. Judge Sontchi said that Limbacher had earned the bonus, but it didn’t qualify for this priority payment.

Millennium is in bankruptcy protection, felled by a number of whistleblower lawsuits filed by former employees and doctors who claim the company’s growth was fueled by unnecessary tests and illegal kickbacks to physicians, as a Justice Department investigation concluded was the case, the Wall Street Journal reported today. Before last week’s bankruptcy filing, Slattery and minority owner TA Associates struck a deal with most of their bondholders to turn over ownership of the company and pay $325 million to settle the federal probe. In return, the owners get to walk away from any potential lawsuits tied to claims related to the federal probe. That plan is facing pushback in court, where at least one investor, Voya Investment Management Co., claims Millennium’s owners are getting off too lightly. The bankruptcy settlement is just a fraction of the cash the two owners took out of the company in the past three years as dividends, Sharon Levine, lawyer for Voya, said last week in bankruptcy court.

Tens of thousands of borrowers just won the right to get relief on their student loans, following the conclusion of an investigation into defunct for-profit colleges, Bloomberg News reported yesterday. California Attorney General Kamala Harris and the U.S. Department of Education yesterday announced the end of a probe into Corinthian Colleges, a company that once owned more than 100 for-profit colleges and filed for bankruptcy in May. “Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” said Attorney General Harris. The investigation found that the company had lied to students for years about their chances of getting a job after graduating from two of its chains, Wyotech and Everest University. Now 85,000 students who went to the schools in California, or took courses in Everest's online program, will be allowed to apply for loan forgiveness through the Education Department. Read more. 

To read more on student debts and bankruptcy, be sure to pick up a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code.