Energy Futures Receives Court Confirmation to Exit Bankruptcy

by San Antonio Attorney

Energy Future Holdings Corp, the largest energy company in Texas, received U.S.  court confirmation on Aug.  26 for its Chapter 11 exit plan.

U.S.  Bankruptcy Judge Christopher Sontchi has overruled the unresolved objections against the bankruptcy plan of the company.

Energy Future, located in Dallas, sought for bankruptcy protection in April 2014 when feeble electricity prices caused it to default on its $42 billion debt, which was mainly incurred by the creation of the company through a buyout in 2007.

It was the biggest bankruptcy in the history of America after General Motors Co.  declared bankruptcy in 2009.

The restructured company will acquire TXU Energy, Texas’ biggest electric utility retailer, and Luminant, the state’s biggest coal miner and power plant operator.  The spinoff of the two subsidiaries into the new company circumvents a tax burden that had caused apprehensions to creditors.

Energy Future owns 80% of Oncor, which holds the principal network of power lines in the state, is still in Chapter 11, and is waiting for a court confirmation.

An earlier plan by Energy Future to emerge bankruptcy was approved by the bankruptcy judge in 2015 but faltered after government regulators objected on the sale of Oncor to a group of investors and creditors headed by Hunt Consolidated Inc., a privately owned group of companies based in Dallas, Texas.

In July, Energy Future accepted the offer of NextEra Energy Inc., based in Florida, to buy the company for $18.4 billion.  Nevertheless, Energy Future continues to accept other offers for Oncor.

Before it takes effect, the most recent restructuring has to get permission from the Railroad Commission of Texas, which is expected to happen in September.

The sale plan received considerable approval from creditors but was contested by a number of noteholders who argued it would unfairly recompense creditors for back-office operations and tax benefits that would be assumed by the new company.

The first lien lenders, who are the new owners of the company, have not yet chosen a name for the company.

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