Energy Future Files for Bankruptcy

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April 29 (Bloomberg) -- Energy Future Holdings Corp. filed for bankruptcy after reaching a deal with stakeholders to cut billions in debt. Bloomberg’s Beth Jinks reports on Bloomberg Television's “In The Loop.” Kobi Partners Founder and Managing Partner Greg Rayburn also speaks. (Source: Bloomberg)

Bankruptcies ever.

This country had -- company had over $40 billion in debt.

What happened?

What led to the bankruptcy?

Almost $50 billion in in debt, what happened was a case of very bad timing.

The leveraged buyout was the biggest one ever done.

Within a year the prices had collapsed.

No one seemed to foresee that the shale and the fracking and the price of gas would have collapsed within months.

Did they need to file for bankruptcy?

At tro gas prices were weak, but now they are getting much stronger.

It is interesting, as a backdrop to this and you will know this from covering restructuring, most of the bankruptcies we have seen in the last two years are ones that are very far beyond the pale.

One foot out the door in terms of liquidation.

The reason for that is because credit is readily available, cash is plentiful, most things get worked out prior to having to go down that path because chapter 11 cannot only be destructive to the business itself but it is extremely expensive.

Someone has to foot that bill.

When i see a company like this, a real company with real assets that was simply overleveraged for their play on natural gas prices, the fact that they filed means that someone in the structure does not want to take the pay.

They have been wrangling.

They just start crying.

Someone did not want to see it the way the other groups saw it.

And they are forced into chapter 11. that just means that they will have much more expensive wrangling going on.

Would you agree with that from your reporting?

There is definitely separation and credit.

The majority of creditors are taking ownership of a big chomp -- big chunk of the company.

They are giving about $23 billion in debt here.

It is a situation where the creditors wanted a discount and have reached a prearranged agreement with a number of the creditors in advance of the filing this morning.

Who is going to be left with the most money when this is over?

They are separating the company under an agreement that was hashed out last night.

The case of oak tree, apollo, they are taking ownership of the unregulated portion.

Existing creditors are going to own regulated utility and are putting into billion dollars more in equity to maintain their initiative.

All right, some big numbers there.

Thank you so much.

Thank you for your perspective.

All right, still ahead, it is a tough job and someone had to do it.

We had to sift through some movie stars.

How did they actually stack up?


This text has been automatically generated. It may not be 100% accurate.


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