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Bondholders who lost an $890 million court fight with Energy Future Holdings Corp. are maneuvering to get a hearing in a federal appeals court before the power company's $42 billion bankruptcy is over and done, Dow Jones Daily Bankruptcy Review reported today. Once Energy Future exits bankruptcy, bondholders risk being told their appeal would upset too many other investors with big money riding on the company's chapter 11 plan, lawyers for the bondholders said in court papers. They are seeking permission to make a beeline to a federal appeals panel in Philadelphia to challenge their bankruptcy court losses. A court contest over Energy Future's chapter 11 plan is slated to begin next week, but chances are the company won't be ready to implement its turnaround plan until April, or even later, bondholders say.

Bankruptcy Judge Robert Kressel yesterday granted the Archdiocese of Minneapolis and St. Paul the extra six months it wanted on exclusive rights to file its reorganization plan, but he rejected a request to hire more consultants — even at the discounted rate of $595 per hour, the Minneapolis Star Tribune reported today. The Archdiocese wanted to hire BRG Capstone to handle any possible future clergy sex abuse or other claims that people could file against it, even though the deadline for filing those has passed. Judge Kressel declared the possibility of future claims “remote.” If people do come forward, they wouldn’t require special representation because they are already represented by the unsecured creditors’ committee, he said. Read more.

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While lawyers tried to cut deals in the hallway, Energy Future Holdings Corp. battled in court on Wednesday in a bid to defeat bondholder demands for some $460 million in interest, Dow Jones Daily Bankruptcy Review reported today. Slightly more than half of the investors who own a $1.6 billion issue of Energy Future bonds have agreed to a settlement that gives them about 60 percent of the interest they claim they are owed. If the court fight plays out, the settlement could be a better deal for bondholders than Judge Christopher Sontchi will rule is appropriate. Energy Future, a Dallas-based electricity giant, filed for chapter 11 bankruptcy-court protection in April 2014 and is trying to clear away potential trouble spots before hearings start next week on its chapter 11 emergence plan.

Caesars Entertainment Corp.’s bankrupt operating group said in a court filing that it has cancelled the auction of property at its failed Harrah's Tunica Casino in Mississippi amid a lack of bidders, Reuters reported today. Casino operator Caesars Entertainment Operating Co., which filed for chapter 11 in January with $18 billion of debt, had been trying to sell Tunica for two years before closing its doors amid a slump in gambling and tough local competition. Caesars said that it would ask Bankruptcy Judge Benjamin Goldgar to approve the sale of Tunica to stalking-horse bidder TJM Properties Inc, a Florida real estate investment firm that develops senior living facilities, at a Nov. 2 hearing. TJM has offered $3 million cash for the leftover property at Tunica.

Democratic presidential hopeful Hillary Clinton called on Peabody to do what she called “the right thing” and honor its commitments to help fund the benefits as part of a settlement reached in Patriot Coal Corp.’s first chapter 11 case, the Wall Street Journal reported today. Under that agreement, reached in 2013, Peabody agreed to pay $310 million over four years to help cover retiree health benefits. The deal resolved a long-running fight over who was responsible for the significant retiree liabilities that came with the mining units that Peabody spun off to create Patriot in 2007. Peabody asked a St. Louis bankruptcy judge to revisit that deal, arguing that the events of Patriot’s second chapter 11 case essentially take it off the hook for future obligations. The judge recently agreed to let Peabody move forward with this argument, which the United Mine Workers of America is appealing.

Potential bidders for CEOC, a casino-operating unit of Caesars Entertainment would be wading into the middle of a costly and complicated bankruptcy, and they note that Caesars has left key assets — including a crucial piece of its big-data customer loyalty program — out of the package, according to a Reuters commentary yesterday. Analysts and some junior creditors have suggested that Caesars isn't serious about selling its CEOC operating unit and expressed doubt that the offering will attract any bidders. In court documents, the operating unit itself noted that the bidding process "may not result in any offers" and that if there is a successful bid "there is no guarantee that the transaction will close." One major factor behind buyers' skepticism about Caesars' proposed sale, designed to test CEOC's value under a plan to emerge from its $18 billion bankruptcy, is that the operating unit lacks clear control of its Total Rewards loyalty program, analysts and industry players said. The program manages sought-after information on its 45 million members' spending habits, and it instantly adds value to any casino brought into the program. Under a complex operating structure, CEOC owns Total Rewards. But a separate, non-bankrupt unit called Caesars Enterprise Services controls the licensing agreement that channels business between casinos putting that piece of the program out of reach of bidders for the casino operating unit. Read more. 

For further analysis of valuation in bankruptcy, be sure to pick up a copy of ABI’s A Practical Guide to Bankruptcy Valuation. 

Creditors linked to the valuable transmissions business that is the centerpiece of Energy Future Holdings Corp.'s bankruptcy-exit plan criticized the company's turnaround strategy as unfair and illegal, Dow Jones Daily Bankruptcy Review reported today. The objections came as the Dallas energy company readies for the start of a court contest over its strategy for appeasing creditors owed $42 billion. Creditors with claims on Oncor, the transmissions business, contend that the deal at the heart of Energy Future's bankruptcy emergence plan strips them of rights and sticks them with risk. Energy Future wants to sell its Oncor transmissions business and pay off creditors of one division while spinning out its other division as a separate company, owned by senior creditors.

Arch Coal Inc. moved closer to bankruptcy after noteholders rejected a debt exchange proposal aimed at boosting the coal miner's liquidity, Reuters reported today. Heavily-indebted Arch Coal has been hit by weak demand and stricter regulation, factors that have already pushed Alpha Natural Resources and Patriot Coal into chapter 11 protection. Arch Coal said today that it is currently working with creditors to restructure its balance sheet. Arch's debt restructuring plan includes swapping existing debt for longer-term securities with the aim of reducing total debt and annual interest expenses by around 20 percent. Last week, a request by a unit of GSO Capital Partners that holds some of Arch Coal's unsecured notes seeking to prevent a group of senior lenders from blocking the debt swap was turned down by a New York State Supreme Court judge. Senior lenders have argued that the terms of the debt exchange reduce the amount they stand to recover, while junior bondholders have said a debt swap deal is necessary to keep the company from filing for bankruptcy.

Invention startup Quirky Inc. will need to change some of the terms of a $1.6 million bonus package for four top executives before a bankruptcy judge will sign off on it, but the company did obtain approval to sell the company's assets during an auction next month, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Martin Glenn said during a hearing on Friday that he would be willing to approve the first piece of the bonus plan, which pays out 33 percent, or roughly $430,000 of the $1.6 million package, to the executives for having secured a lead bidder. But Judge Glenn said that the second milestone, which provides 50 percent of the package if the executives line up a competing bidder, would result in a net loss to Quirky's bankruptcy estate cannot be approved. During the hearing, the judge explained that the executives would receive an additional $650,000 roughly in aggregate for lining up a bid that was only worth an additional $200,000 to the estate. Lawyers for Quirky said they would rework that threshold and present a new package for the judge's consideration by today.

An agreement that would enable a coal company seeking bankruptcy protection to renew a state mine permit despite not meeting pre-existing state bonding requirements ignores the law, the organizer of a landowner group said, the Associated Press reported yesterday. The agreement falls short of enabling the state to secure the almost $200 million that would be needed to reclaim Alpha Natural Resources’ Eagle Butte mine near Gillette, said Shannon Anderson of the Powder River Basin Resource Council. Instead, the deal would give Wyoming priority access to $61 million in case either or both of the company’s two mines in Wyoming closed and needed to be reclaimed. The full sum of the company’s $411 million in required reclamation bonding for the two mines would be a lower creditor priority. Meanwhile, the state’s pre-existing bonding requirements would not prevent the company from getting a new mine permit, according to the agreement filed in bankruptcy court.