WILMINGTON, Del, May 2 (Reuters) - Energy Future Holdings Corp, Texas's biggest power company that filed for bankruptcy on Tuesday, received court approval on Friday for its generating business to borrow more than $2 billion.
The company, formerly known as TXU Corp, reduced the originally proposed $2.7 billion loan to its TCEH generating business by more than $300 million after overnight talks with lower-ranking creditors who said the borrowing was excessive.
TCEH, or Texas Competitive Electric Holdings Co, needed money to pay employees and suppliers and meet regulatory requirements. The business owns Luminant generating plants and the TXU Retail power company.
Energy Future filed one of the largest Chapter 11 bankruptcies in U.S. history after a year of struggling to work out a deal with its creditors. The company said it plans to exit bankruptcy in a year.
It was the target of a record $45 billion buyout in 2007 that loaded it with debt just as electricity prices began to fall. The deal was led by KKR & Co LP, TPG Capital Management LP and the private equity unit of Goldman Sachs Group Inc.
At Friday's hearing in U.S. Bankruptcy Court in Wilmington, Delaware, Edward Sassower, a Kirkland & Ellis attorney who represents Energy Future, said the company "worked into night" to resolve objections to the borrowing.
The borrowing was approved by Judge Christopher Sontchi, who also presided over hours of arguments and testimony during Energy Future's first bankruptcy hearing on Thursday.
Energy Future and its creditors will return to battle in court again beginning June 5.
At that hearing, the TCEH unit will seek final approval to increase the borrowing limit to about $4.475 billion and a loan of more than $7 billion for its business that owns a network of power lines.
Lower-ranking creditors filed notices that they will begin deposing Energy Future executives including Paul Keglevic, the chief financial officer, next week as they gather evidence to try to prove the company has the ability to pay them.
The company has proposed splitting its Luminant and TXU Retail business and turning it over to lenders who are owed about $24.4 billion.
Lower-ranking creditors of that business stand to recover less than 3 percent of what they are owed.
Energy Future also proposed, its other main business, a holding company that owns the Oncor network of power lines, will emerge from bankruptcy under the control of that unit's unsecured creditors.
The proposal for Oncor's holding company is opposed by its highest-priority creditors because it would retire their loans before the maturity date without an added "make-whole" payment that those creditors say they are owed. Oncor did not file for bankruptcy.
The case is In re: Energy Future Holdings Corp, U.S. Bankruptcy Court, District of Delaware, No. 14-10979. (Editing by Grant McCool)