Fifth Circuit upholds its prior ruling that disallowing part of a claim under the Bankruptcy Code does not render the claim ‘impaired’ to allow voting on a chapter 11 plan.
A group of insurance companies and hedge fund Baupost Group LLC have formed a creditor group to attempt recouping the billions of dollars in insurance payouts from PG&E Corp. stemming from damage caused by California wildfires, court documents show, the Wall Street Journal reported. The insurers, including Allstate Insurance Co., the Chubb Group and others, are looking to recoup payments from PG&E for damage to property and for other injuries, court filings show. Insurers believe they may have a right to recover payments they already made to insured parties if it is determined that PG&E is responsible for the California wildfires. Baupost, the $27 billion hedge fund managed by Seth Klarman, has bought up the claims of certain insurance companies, who chose to be repaid at some discount to the full value of their claims rather than pursue them in PG&E’s bankruptcy. California’s largest utility, PG&E filed for chapter 11 bankruptcy protection at the end of January, in a bid to resolve an estimated $30 billion worth of damage claims from earlier fires. Altogether the insurance companies and Baupost reported a total of over $3.6 billion in so-called subrogation claims against PG&E Corp., according to bankruptcy filings. Total insurance claims in the case are likely to be higher than that figure, according to some investors.
An effort by FirstEnergy Solutions to coordinate a publicly funded bailout of its nuclear plants with its emergence from bankruptcy has hit a snag: U.S. Bankruptcy Judge Alan Koschik, cleveland.com reported. After presiding over a full day of arguments, the judge this week refused to approve a complicated disclosure statement the company must send to its creditors, who will then have the right to approve or reject the company’s plan to reorganize itself, after which the court will still have the final say. FES’s reorganization plan calls for major creditors to own the company. Unsecured creditors would get cash, but only a fraction of what they are owed. But creditors won’t be able to vote on the plan until the court is satisfied with the company’s disclosure statement. Koschik also refused to approve an accelerated schedule proposed by FES that would have allowed a vote on the reorganization plan by creditors in April and a hearing on the vote in May. In bankruptcy reorganization cases, the disclosure statement is supposed to disclose possible problems that could derail the plan. But the FES statement doesn’t do that, and there are a lot of potential problems, insisted lawyers for the unions representing nuclear plant workers and lawyers representing environmental groups and a number of U.S. attorneys representing federal regulatory agencies, including the NRC, EPA, FERC and the SEC, and lawyers representing state environmental agencies in Ohio and Pennsylvania.
