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Creditors of bankrupt Energy Future Holdings, Texas's biggest power company, urged a judge to slow its chapter 11 case and warned if a key refinancing proposal was approved it might block better deals from being considered, Reuters reported yesterday. In the past week, the company's majority stake in a powerlines business known as Oncor has sparked a flurry of activity comparable to a merger-type bidding war as creditors scramble to get their hands on the unit's steady cash flow. The company wants Bankruptcy Judge Christopher Sontchi to allow its EFIH unit, which owns Oncor, to borrow around $2 billion to fund a settlement that will redeem high-yield debt, saving $11 million a month in interest payments. The loan is backed by the company's unsecured bondholders. Creditors not involved in financing the DIP, or debtor-in-possession, loan have called it "unprecedented" because it will convert into a stake of about 60 percent of Energy Future when the company exits bankruptcy. The potential to gain control over the power company has sparked competing DIP loan proposals, including one with $1.6 billion of backing by NextEra Energy Inc, a Florida company that also has a large Texas presence.

Wireless venture LightSquared has reached a deal to end its chapter 11 bankruptcy, but its largest creditor, satellite operator Charles Ergen, is not on board and "wasted the parties' time," according to a report from the court-appointed mediator, Reuters reported on Friday. The mediator, Judge Robert Drain, said that he believed the plan would be confirmable by the bankruptcy court judge overseeing the case even without Ergen's support. Judge Drain's report, made in a court filing on Friday, did not give details on the deal. LightSquared, which is owned by Phil Falcone's Harbinger Capital Partners, had accused Ergen of using underhanded methods to acquire his controlling stake of its debt. The dispute was sent to mediation after Judge Shelley Chapman rejected a restructuring proposed by LightSquared that would have pushed Ergen's repayment behind other creditors.

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle, Bloomberg News reported yesterday. The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and to prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks. A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country to pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate.
http://www.bloomberg.com/news/print/2014-06-29/argentina-at-brink-of-de…

To learn more about the next steps for Argentina and sovereign debt restructuring, be sure to watch James Millstein’s June 20 presentation, which he made at ABI’s Cross-Border Symposium: http://news.abi.org/videos

Bankrupt Energy Future Holdings' novel plan to sell itself through a loan provision has Texas's largest power company in hot water with creditors, who accuse it of trying to skirt a public sale process and hiding its true value, Reuters reported yesterday. The company and its creditors are heading for a courtroom showdown on Monday when Energy Future will seek a judge's approval to take on a $2 billion loan that would give a group of hedge fund lenders 60 percent of the company when it emerges from its $48 billion bankruptcy. Other creditors have cried foul, saying that Energy Future hasn't considered competing offers and is selling itself without a traditional court-supervised bankruptcy auction. Creditors have estimated Energy Future has a total enterprise value, which includes debt, of $21 billion thanks to its EFIH unit, which owns Texas's biggest power lines operator, Oncor.The fight centers on EFIH's plan for a debtor-in-possession loan that would refinance high-yielding notes. Energy Future can consider alternate transactions, but creditors said once the loan is approved restrictive provisions will deter any potential bidders. John Penn, a bankruptcy attorney at Perkins Coie in Dallas, who is not involved in the case, said the judge has flexibility to decide what to with the assets if he rejects the company proposal on Monday. "Sometimes it becomes a formalized process with bid procedures and other times you just have the competing parties show up in court with their offers and each makes their pitch," said Penn.

Energy Future Holdings rejected an unsolicited $2.3 billion restructuring plan by NextEra Energy Inc. that would have given the alternative energy group a large stake in Energy Future's power lines unit, according to court filings, Reuters reported yesterday. The proposal, which was revealed in court filings on Monday, was developed by NextEra and a group of investors that hold second-lien notes issued by Energy Future's EFIH unit, which in turn controls the Oncor power distribution business. Energy Future Intermediate Holding (EFIH) rejected the proposal in favor of a plan already advanced by a group of investors who hold the unit's unsecured bonds, according to court filings. Both proposals take the form of a loan to refinance EFIH's high-yielding second-lien notes, which would cut interest costs. Rather than repay the loan, when EFIH emerges from bankruptcy the financing would convert into an equity stake of a little more than 60 percent of the company.

Houston Astros owner Jim Crane has sued Comcast Corp. accusing the cable company of fraud in selling him a stake in the "overpriced and broken" regional broadcast venture, Comcast SportsNet Houston, Dow Jones Daily Bankruptcy Review reported today. Comcast, which owns part of the regional sports venture, pushed it into bankruptcy in September, blocking a drive by Crane to force co-owner Comcast out of its spot as broadcaster. Comcast denied the charges of fraud in the lawsuit and said it would defend against allegations that the November 2011 sale of the Astros baseball team and more than 40 percent of the network to Crane was founded in "knowing misrepresentations" about the network's financial prospects.

Energy Future Holdings Corp., the subject of the largest leveraged-buyout ever, revised a $1.9 billion loan to help it emerge from bankruptcy after a group of creditors submitted a competing plan with NextEra Energy Inc., Bloomberg News reported yesterday. The original second-lien debtor-in-possession loan will convert into 60 percent of the equity in a newly reorganized company, down from 64 percent initially described in the restructuring proposal. The interest rate on the debt will be reduced to 6.25 percent from 8 percent. The former TXU Corp. filed for chapter 11 protection on April 29 in a bid to restructure its $49.7 billion of debt after falling natural gas prices undercut the electricity provider’s ability to remain profitable. KKR & Co., TPG Capital and the private-equity unit of Goldman Sachs Group Inc. took Dallas-based Energy Future private for $48 billion in 2007.

Defense attorneys for two ex-leaders of Dewey & LeBoeuf said in court papers filed on Friday that unless a trustee’s lawsuit against them is halted in bankruptcy court, they will be forced to depose prosecution witnesses from the criminal case against them, Law.com reported yesterday. Alan Jacobs, the liquidating trustee overseeing the defunct law firm Dewey & LeBoeuf, is seeking to recover more than $21.8 million from former CFO Joel Sanders and former executive director Stephen DiCarmine in a clawback lawsuit in Southern District Bankruptcy Court, Jacobs v. DiCarmine, 13-01765. Earlier this month, Jacobs amended his complaint to add new claims for “actual intent” fraudulent transfers, incorporating details from the criminal indictment and the SEC complaint against former firm leaders, as well as the guilty pleas of seven former Dewey accounting employees. Jacobs said that the circumstances surrounding the firm’s payments to Sanders and DiCarmine reveal “several badges of fraud” and their employment contracts awarded them “exorbitant compensation and required, literally, nothing in return.” Now Sanders and DiCarmine are asking for a stay of the entire clawback suit until the criminal case in Manhattan Supreme Court is resolved.

Brookstone Holdings Corp. will go before a bankruptcy judge this week to seek approval of its bankruptcy exit plan, the Wall Street Journal reported on Saturday. The centerpiece of the retailer’s plan is a $174 million bid to buy the company from Sailing Innovation US Inc. — a collaboration between Chinese investment firm Sailing Capital Overseas Investment Fund LP and Chinese conglomerate Sanpower Group, with a financing commitment from GE Capital. The consortium’s bid trumped a $146.3 million offer by an affiliate of Spencer Spirit Holdings Inc., the parent of the Spencer’s and Spirit Halloween retail chains, which had served as the lead bidder at a June 2 auction. Under the current plan, Brookstone’s unsecured creditors will receive at least $1.25 million, plus a chance to collect as much as $1.5 million more depending on how much money comes in from the sale. The plan also proposes to pay off the company’s approximately $51 million in bank loans with a loan provided by bondholders funding the restructuring.

Bankruptcy Judge Susan V. Kelley ruled on Friday that she does not have jurisdiction to approve the Archdiocese of Milwaukee's reorganization plan while key questions in a related lawsuit over $60 million it holds in trust for the maintenance of cemeteries are pending before the Seventh Circuit Court of Appeals, the Milwaukee Journal Sentinel reported today. The decision is a victory for the creditors committee, which had sought to block approval of the plan until the appellate judges rendered their decision — a process some have said could take a year. And it has forced the cancellation of the October confirmation hearings, at least for now — a setback for the archdiocese. At issue before the Seventh Circuit is whether forcing the archdiocese to put even $1 of the cemetery trust into the bankruptcy estate — and ultimately a settlement for clergy sex abuse survivors — would violate its free exercise of religion under the First Amendment and the 1993 Religious Freedom Restoration Act. Judge Kelley ruled earlier that it would not. She was overturned by U.S. District Judge Rudolph T. Randa, who found that cemeteries and their proper care play a central role in the Catholic belief in the resurrection of the body after death. The appellate court also is considering a request by the creditors committee that Randa be barred from hearing any issues related to the cemetery trust because of a conflict of interest.