Abengoa U.S. Subsidiary Gets Court Approval to Leave Bankruptcy

by San Antonio Attorney

A major U.S. unit of Abengoa SA obtained permission of a court to leave its Chapter 11 bankruptcy, the court records show.  The Spanish energy company is now one step closer to accomplishing a global debt-reduction plan.

Abeinsa Holding Inc. is one of Abengoa’s subsidiaries that sought for bankruptcy protection while the holding company designed a high-stakes scheme to reduce its $10 billion of liabilities and circumvent its own bankruptcy back in Spain.

U.S. Bankruptcy Judge Kevin Carey said Abeinsa’s plan is an important part of the restructuring of the group of companies.

The restructuring agreement requires major bank lenders like Santander to trade equity for debt in the renewable energy company.

As part of its reorganization in the U.S., the Spanish company is going to maintain its ownership of the American businesses, which includes construction and engineering firms, and solar energy and biofuel plants.

Abengoa is going to allocate funds into a litigation trust to settle future lawsuits and another trust for potential claims of insurer.

Portland General Electric had objections to the plan but they were dismissed by Carey.  PGE sued the company over alleged cost increases and construction flaws at a power plant in the state of Oregon.  The U.S. Trustee also opposed to Abengoa’s plan.

Though Carey acknowledged that the lawsuit protects Abengoa and associated parties in an very broad extent, he was certain that the company’s plan is a component of the comprehensive restructuring of the group of companies.

While U.S. creditors are going to get just cents for every dollar of debt, the judge said the restructuring plan presented a superior outcome that a total liquidation.

The global debt restructuring plan of Abengoa is supported by the Spanish court and shareholders, though many creditors are still questioning the Spain’s court validation.

Leave a Comment

Previous post:

Next post: