(Adds the committee selecting a law firm, in paragraph five)
By Tom Hals
WILMINGTON, Del. May 12 Unsecured creditors of
bankrupt Energy Future Holdings, as well as one group of secured
bondholders considered far out of the money, formed a committee
on Monday that will play a major role in the restructuring of
the biggest power company in Texas.
The seven-member committee, whose job is to advocate for all
unsecured creditors, included the Pension Benefit Guaranty Corp,
as well as representatives of bondholders and suppliers to the
company which filed for Chapter 11 bankruptcy on April 29 with
$9.6 billion owed to unsecured creditors.
The company also owes $32 billion to higher-priority
creditors, making it one of the biggest non-financial companies
to file for bankruptcy.
In a rare move, the committee will include a representative
of secured noteholders that the company says are so unlikely to
get paid that they are essentially involuntarily unsecured.
The committee selected the Morrison & Foerster law firm to
Creditors' committees are appointed by the Office of the
U.S. Trustee, a Department of Justice arm that oversees big
bankruptcy cases. Such committees are critical components of big
Their professional fees are paid by the estate of the
bankrupt company, and their support is typically sought on any
restructuring plan proposed by the company. Without the
committee's backing, a bankruptcy can get bogged down in
expensive and time-consuming litigation.
Scores of firms descended on the DoubleTree by Hilton Hotel
in Wilmington for Monday's meeting for a chance to make their
pitch to committee members. Representing creditors' committees
in bankruptcy is a lucrative and sought-after role.
Some advisers milling in the hotel lobby on Monday said they
thought Energy Future should have had two committees. One would
represent the creditors of the company's unregulated Luminant
generating business and TXU Retail power company, while a second
would advocate for creditors of the holding company that owns
the Oncor power lines business. Oncor is not in bankruptcy.
Lawyers for creditors argued in recent court hearings it
might be a mistake to consolidate the various subsidiaries into
one Chapter 11 case, a standard practice in bankruptcy, because
the operations and creditors were so distinct.
(Reporting by Tom Hals in Wilmington, Delaware; Additional
reporting by Nick Brown in New York; Editing by Cynthia Osterman
and Mohammad Zargham)