June 11 (Bloomberg) -- Creditors of Energy Future Holdings Corp. asked a federal judge to temporarily stop the bankrupt power provider from settling a $706 million dispute with noteholders and to review the deal.
The Dallas-based company won bankruptcy court permission last week to borrow $5.4 billion to refinance debt of its regulated power-transmission unit. Under a related settlement, the unit’s noteholders would be paid in full, with some getting extra to resolve their claims for early repayment fees.
Noteholders that accepted the settlement earlier would recover a bigger percentage of their claims than those that joined later. Those that reject the settlement can fight the company in a trial set for September. CSC Trust Co. of Delaware, a trustee for holders of $3.5 billion in notes of the regulated unit, appealed the deal June 9, saying it was unfair to the majority of noteholders.
“This court must, at the very least, hold a hearing,” CSC Trust said in a filing in U.S. District Court in Wilmington, Delaware. Noteholders may be owed early termination fees totaling as much as $706 million, CSC Trust said.
Energy Future asked the court to allow the settlement to go forward, saying a halt would disrupt its plan to refinance Energy Future Intermediate Holding Co.’s notes at a lower interest rate. U.S. Bankruptcy Judge Christopher Sontchi last week overruled an objection by CSC Trust while approving the $5.4 billion loan and the related settlement.
The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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