Abengoa's U.S. unit, holdout creditor spar over bankruptcy plan

WILMINGTON, Del./CHICAGO (Reuters) - A U.S. subsidiary of Spanish renewable energy firm Abengoa SA pressed a judge on Tuesday to approve its plan to exit bankruptcy over objections from a holdout creditor, who said the plan violated U.S. law by favoring the company’s foreign parent.

After more than three hours of testimony and arguments, U.S. Bankruptcy Judge Kevin Carey in Wilmington, Delaware, said he wanted additional written submissions from the parties. He did not say when he would rule.

Abeinsa Holding Inc is one of dozens of global Abengoa ABG.MC subsidiaries that filed for U.S. Chapter 11 and 15 bankruptcy this year while their Seville-based parent thrashed out a debt restructuring deal in Spain to avoid its own bankruptcy.

The U.S. subsidiaries, which range from small ethanol plants to construction and engineering firms like Abeinsa, were guarantors of $10 billion of debt held by the parent.

“This (plan) allows the debtor to give creditors a meaningful recovery with substantial upside and gives Abengoa a fresh start in the United States,” said Abeinsa lawyer Richard Chesley at Tuesday’s hearing. “It brings to prompt conclusion one of the most complex Chapter 11 and cross-border restructurings in recent memory.”

A Spanish court approved Abengoa's restructuring agreement last month, giving a group of lenders including Spain's Santander SAN.MC equity in exchange for debt.

Under the U.S. plan, Abengoa will invest more than $30 million cash in exchange for retaining full control of the U.S. units.

The lone objecting creditor, Portland General Electric Corp POR.N, argued the plan violated U.S. bankruptcy law, which requires a shareholder to relinquish its entire investment if creditors are not paid in full. Abeinsa's creditors are expected to receive only pennies on the dollar.

Portland General Electric is involved in litigation with an Abengoa affiliate over a botched power plant project and its lawyer, Al Smith, argued the various bankrupt Abengoa affiliates hold more cash than the parent is investing to retain control.

“Every penny that is going into this plan, which is purportedly from Abengoa, is coming from the debtors themselves,” Smith said.

Chesley countered that the cash was held by Abengoa units that had few creditor claims, and the excess rightfully belonged to the parent.

The U.S. affiliates won over a group of insurers prior to the hearing by offering added payouts.

Reporting by Tracy Rucinski; Editing by Tom Brown