Chip Bowles Shares Opinion on the Energy Future Bankruptcy Plan
Bloomberg Businessweek recently reached out for BGD partner Claude R. “Chip” Bowles to get his opinion about the Energy Future Holdings Corp.’s future plan to recover from going bankrupt. Energy Future Holdings Corp. said it may reconsider its restructuring plan to pay hundreds of millions of dollars to select creditors after lenders left out in the cold forced talks on a rival deal.
Energy Future filed for bankruptcy on April 29, 2014, seven years after it was taken privately in a record leveraged buyout. Energy Future’s reorganization plan, drawn up before bankruptcy with “anchor” investors such as Boston-based Fidelity and Pacific Investment Management Co., called for splitting the company.
Energy Future was set to lock in its plan. However, many people saw the failing company as an opportunity to make a profit and began picking away at its “dying carcass.” Now, the plan is unraveling and ultimately hurting the company’s chances of getting out of bankruptcy next March.
Energy Future’s Present
U.S. Bankruptcy Judge Christopher Sontchi already approved two loans totaling $9.9 billion just weeks after the company’s April collapse. The loans are to help the company pay existing creditors, finance the reorganization and reward supportive lenders.
Edward Sassower, a lawyer for the company, said the plan will have to be modified or canceled because of rising prices for the company’s debt and new offers for assets. If changes can’t be made by Aug. 8 at the latest, the deal will be terminated, he said.
Energy Future’s Future
However, Bowles believes that it will be hard for the plan to be completely ruined. “Unless the company’s plan totally ignores the bankruptcy code, it usually takes strength in numbers to get a judge off that path of confirmation,” he said. Bowles is a bankruptcy lawyer and was not involved in this case.