Saying they need a little more breathing room, just in case, Longview Power LLC and its affiliates on Dec. 27 asked their bankruptcy court for an extended “exclusivity” period to win acceptance of their reorganization plan.
Longview and related companies, including Northern Appalachian coal producer Mepco LLC, sought Chapter 11 protection in August 2013 at the U.S. Bankruptcy Court for the District of Delaware. Longview cited a slumping power market and mechanical problems at its 700-MW coal plant in northern West Virginia, which went online around the end of 2010, as reasons for needing bankruptcy protection. The company is involved in extensive litigation and arbitration over the mechanical issues with the contractors that built the power plant.
Longview has obtained new financial backing from entities known in court filings as the “backstoppers” and plans to emerge from Chapter 11 in early 2014.
In the Dec. 27 motion, Longview asked the court to extend its exclusive right to file a Chapter 11 plan through and including March 14, 2014, and to solicit creditor votes backing that plan through and including May 15, 2014. The current deadline to get acceptances for the plan is Feb. 26. Without continued exclusivity, outside parties could file their own competing reorganization plans. The Dec. 27 motion is due for hearing on Jan. 22.
Longview and its affiliates (collectively called the “Debtors”) told the court that their efforts up to now to get out of Chapter 11 include:
- negotiated and documented the reorganization plan, which will “right-size” the Debtors’ balance sheet by eliminating $1bn in funded debt through a debt-for-equity conversion;
- documented, negotiated, and obtained court approval for the reorganization plan;’s accompanying Disclosure Statement, permitting the Debtors to solicit votes to accept the plan;
- negotiated and obtained court approval for the Debtors’ $150m debtor-in-possession facility, which is the “backbone” of the plan and provides the Debtors with the capital required to repair the Longview coal plant;
- entered into an agreement and obtained court approval to purchase, among other things, 100% equity interest in Dunkard Creek Water System Treatment and GenPower Services LLC, which will, among other things, secure the Debtors’ access to water treatment facilities necessary to their operations. These related companies treat water accumulated in old coal mines located near the power plant, with the water then used at the power plant. Dewatering of the old mines also helps Mepco at its ongoing mining operations nearby; and
- initiated a process to estimate at zero (for all purposes) the contractors’ disputed mechanics’ lien claims, a process that is essential for the Debtors to emerge from Chapter 11 protection as a stronger, de-leveraged enterprise.
“Even with these successful steps, the Debtors must retain the ability to focus on the remaining restructuring initiatives that are important to their emergence from chapter 11 protection,” the Dec. 27 filing added. “Among other things, the Debtors must: (a) estimate at zero (for all purposes) the claims that the Contractors hold against the Debtors’ estates through either a global settlement or through the estimation process; (b) consummate the purchase of the equity interest in Dunkard Creek and GenPower Services and, if necessary, resolve issues related to Dunkard Creek’s funded debt; and (c) obtain confirmation of the Plan. Importantly, each of these issues may be resolved in the coming months; indeed, the proposed hearing date for the Claims Estimation Motion is February 7, 2014, and the hearing to confirm the Plan is currently scheduled for February 10, 2014.”