Energy Future Proposes Pre-Packaged Bankruptcy of Some Units

Energy Future Holdings Corp., the power producer that was taken private six years ago in the largest leveraged buyout, proposed a pre-packaged bankruptcy that would put Texas Competitive Electric Holdings, which sells power on wholesale markets, and some other units in Chapter 11.

In an initial plan to restructure Texas Competitive’s $32 billion debt, the unit's first-lien creditors would forgive debt in exchange for equity in the parent company and $5 billion in cash or new debt, Energy Future said today in a regulatory filing. The private-equity sponsors, including KKR & Co. and TPG Capital LP, informed lenders they would back the plan if they retained 15 percent of the company’s equity interest, leaving 85 percent for holders of the unit’s senior loans.