Biggest LBO Failure Is Energy Future Purgatory for KKR

Five years after their record-setting leveraged buyout of Energy Future Holdings Corp., KKR & Co. and TPG Capital are moving closer to a possible new milestone: the biggest bankruptcy of a private equity-backed company since the failure of Chrysler Group LLC.

Texas Competitive Electric Holdings, the utility’s wholesale power unit, faces an October 2014 deadline on the maturity of a portion of its loans. Informal restructuring talks already have taken place, according to two people with knowledge of the matter. Senior lenders -- including Franklin Resources Inc., Apollo Global Management LLC, Oaktree Capital Group LLC and GSO Capital Partners -- probably would seek to seize the unit if there is a bankruptcy, said one creditor, who asked not to be identified because the process is private.