Energy Future Wins Approval of Settlement Behind Debt Plan

Energy Future Holdings Corp. won bankruptcy court approval of the creditor settlement underpinning its $30 billion restructuring plan.

The judge in Delaware has yet to rule on the plan itself.

The settlement became known in the case as the “disarmament” deal. Creditors could have filed several potential lawsuits against Energy Future’s equity sponsors or by one division of the company against another.

Some of the claims related to Energy Future’s record $48 billion leveraged buyout, which saddled the company with unsustainable debt. Others related to refinancing transactions in 2011. The settlement releases claims against equity sponsors.

The total value of all the potential litigation was about $8 billion, U.S. Bankruptcy Judge Christopher Sontchi said Thursday. Fighting instead of settling could cost hundreds of millions of dollars in legal fees.

“Every dollar saved in the settlement is another dollar made available for creditors,” Sontchi said in reading his ruling.

The case is Energy Future Holdings Corp., 14-bk-10979, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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