Energy Future Creditors Should Wait on New Panel: TrusteeSteven Church
A group of Energy Future Holdings Corp.’s creditors should wait at least 30 days before asking a judge to approve a second committee to represent debt holders in the company’s $49.7 billion bankruptcy case, said the U.S. Trustee, which oversees such panels.
“The appointment of a second creditors’ committee at this time is premature,” Richard L. Schepacarter, an attorney with the Office of the U.S. Trustee said in a court filing in Wilmington, Delaware, yesterday. “In fact, it may be unnecessary.”
Last month, American Stock Transfer & Trust Company LLC asked the U.S. Trustee to appoint a second panel to represent lower ranking creditors of Energy Future. American Stock is the indenture trustee for investors holding the company’s so-called legacy notes and some debt related to the company’s 2007 leveraged buyout.
Energy Future filed bankruptcy in April, listing $49.7 billion of debt. A plan negotiated with senior lenders to split the company in two and give each piece to a different group of creditors was abandoned last month in the face of opposition by lower-ranking debt holders.
The U.S. Trustee has already appointed one committee to represent unsecured creditors of three Energy Future units. American Stock argued that the parent company needs a separate committee because the bankruptcy case is so complicated.
The U.S. Trustee is an arm of the U.S. Justice Department and monitors corporate bankruptcies, appointing creditor committees and occasionally filing court papers on various issues related to the federal bankruptcy code.
Lower-ranking creditors, whose debt is not backed by any collateral, are often represented in large bankruptcies by a committee. The committee is given money by the company to hire lawyers and financial advisers to review reorganization proposals, file motions and fight for the interest of the lower-ranking creditors.
U.S. Bankruptcy Judge Christopher Sontchi is scheduled to consider American Stock’s request on Aug. 13.
The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).