WILMINGTON, Del. (Reuters) - Texas power company Energy Future Holdings Corp will start hearings in February to confirm its Chapter 11 bankruptcy exit plan and its proposed sale of its power lines business to NextEra Energy Inc for $18.6 billion, a judge said on Thursday.
Those hearings had been scheduled to begin on Thursday, but were postponed after the U.S. 3rd Circuit Court of Appeals ruled last month that the company owed holders of its first-lien and second-lien notes about $800 million more than anticipated.
The company’s plan is based on a sale of its main asset, its stake in the Texas-based Oncor power distribution business, to NextEra Energy of Juno Beach, Florida.
Energy Future filed a modified plan of reorganization on Thursday that essentially shifted the cost of last month’s appeals court ruling to holders of junior unsecured notes, by reducing their payout by roughly $800 million.
Those junior creditors argued to U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware that NextEra should be on the hook for making the unanticipated payment to the first-lien and second-lien noteholders. If the Florida power company did not want to pay, then it should drop its merger plan, their lawyer argued.
The unsecured noteholders also asked the judge for a six-week “time out” in the case.
“We should be entitled to a short window to explore a potentially better alternative,” said Abid Qureshi, a lawyer for Akin Gump Strauss Hauer Feld who represents the unsecured noteholders. He said the investors holding the unsecured so-called PIK notes wanted to see if they could find a buyer for Oncor to replace NextEra.
Sontchi rejected their proposed schedule, saying it was important to move the two-and-a-half year case along or risk losing the NextEra deal.
“A six-week time out is not reasonable,” he said. “There is a bird in hand here with NextEra.”
Energy Future filed for bankruptcy in 2014 to cut its $42 billion in debt. The company has already spun off its power generation business, known as Luminant, and its TXU retail utility to senior lenders who were owed $24 billion.
Energy Future was created from the record $45 billion leveraged buyout of TXU Corp in 2007, a deal led by KKR & Co and TPG Capital.