CHICAGO A leading bankrupt subsidiary of Abengoa
SA won U.S. court approval on Wednesday to join a $10
billion debt-restructuring agreement in Spain, a week before a
deadline for the renewable energy firm to secure creditor
support for the plan.
Abengoa, with a global renewable energy footprint, filed for
pre-bankruptcy in November in Spain, and will become the largest
Spanish corporate failure ever unless 75 percent of its
creditors approve a wide-ranging restructuring deal by Oct. 25.
Dozens of Abengoa's subsidiaries filed for U.S. Chapter 11
protection this year and the reorganization of the U.S. and
Spanish businesses both depend on the success of the so-called
master restructuring plan (MRA) in Spain, according to lawyers
U.S. Bankruptcy Judge Kevin Carey approved the request by
Abeinsa Holding Inc, one of Abengoa's two main U.S. subsidiaries
in bankruptcy, to join the MRA, overruling objections by
unsecured creditors who said the deal would give them a recovery
of only pennies on the dollar.
Meanwhile a group of Abengoa's main creditors such as
Spanish bank Santander and U.S. hedge funds like
Oaktree Capital Management will gain control of the company in
exchange for over $1 billion of new cash.
Without their investment, Abengoa could be forced to
liquidate. This would be even worse for unsecured creditors,
some of whom helped finance the construction of one of the
world's largest solar facilities in the Mojave Desert, U.S.
lawyers have said.
"We're trying to walk the line of keeping this plan moving
forward while respecting creditors' rights in the United
States," Abeinsa lawyer Craig Martin said in Delaware court on
One Abeinsa creditor, Nationwide Mutual Insurance Co, asked
the Delaware court to appoint an examiner to investigate
Abengoa's 2014 transfer of the Mojave solar plant to its
Atlantica Yield subsidiary. Carey agreed to hold a
hearing on the request in November.
Joshua Friedman, a legal analyst for Debtwire, said that the
U.S. bankruptcy court's MRA approval allows Abengoa to turn its
attention to Spain, where it is awaiting a ruling from a Seville
court over the standstill agreement protecting the restructuring
That decision is also expected around Oct. 25.