Energy Future postpones hearings after judge questions plans
July 9 (Reuters) - Texas power company Energy Future Holdings has postponed indefinitely court hearings aimed at keeping its fast-track bankruptcy on course after a judge questioned the company's approach.
The company said in a filing on Tuesday that it was postponing hearings scheduled for Thursday and Friday at which it was hoping to win approval to borrow $1.9 billion to help finance its plan to exit bankruptcy early next year.
In April, Energy Future Holdings filed one of the largest U.S. bankruptcies with a plan to split the company in a bid to restructure more than $40 billion in debt.
The company also postponed a July 18 hearing when it hoped for approval of an RSA, or restructuring support agreement, which would commit the company and certain creditors to a schedule and a restructuring outline.
The company said it would use the time to discuss potentially beneficial developments with creditors and outside parties. It also said it would consider July 1 comments from U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware, who questioned if the company was on the "appropriate path."
Energy Future planned to use the $1.9 billion loan, known as a debtor-in-possession or DIP loan, to refinance high-yielding debt of EFIH, its unit that owns Oncor, a regulated power transmission business.
Instead of repaying that loan, the unsecured creditors and their backers who were funding the loan would convert the financing into a stake of about 60 percent in Energy Future when it exited bankruptcy.
"This is clearly not your run of the mill DIP and there's evidence there are serious competing proposals," Sontchi said at the close of the July 1 hearing. He also questioned if the company should be seeking approval of the loan before getting approval of the restructuring support agreement.
"So I think candor requires that I convey that the debtors' record on these particular issues is fairly thin and is going to need more evidence to satisfy the court that this is the appropriate path to continue to go down," he said, according to a court transcript.
Hearings to approve that loan were held on June 30 and July 1, and were set to conclude this week.
Two groups of creditors wanted the company to consider their competing loans, one of which was backed with a $1.6 billion commitment by NextEra Energy Inc, a Florida power company.
Energy Future said in Tuesday's filing it would update the court on July 18.
Separate from its plan to refinance EFIH debt, Energy Future plans to turnover to senior creditors, who are owed $24.4 billion, its unit that owns unregulated power plants and a retail utility.
The case Energy Future Holdings, U.S. Bankruptcy Court, District of Delaware, No. 14-10979 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Grant McCool)