Saying that this is a key to its getting a confirmable Chapter 11 reorganization plan in place, Longview Power on Jan. 12 asked its bankruptcy court to appoint a mediator to handle a long-running dispute with power plant contractors.
Longview Power, which sought Chapter 11 protection in August 2013 in the U.S. Bankruptcy Court for the District of Delaware, controls a 700-MW coal plant in northern West Virginia. The company said it is in bankruptcy due to slumping power markets and the fact that the plant has never operated properly since going on-line early this decade. It has been battling in and out of court with the contractors that built the plant over these mechanical issues.
“As the Court is aware, a telephonic status conference is scheduled for this Wednesday, January 15, 2014 to discuss how best to address the relief requested in (a) the Debtors’ motion to estimate the asserted claims of Foster Wheeler North America Corporation, Siemens Energy, Inc., and Kvaerner North American Construction, Inc. (collectively, the ‘Contractors’) against the Debtors’ estates, and (b) the adversary proceedings filed by the Contractors and the Debtors against each other (collectively, with the estimation motion, the ‘EPC Litigation’),” said the Jan. 12 request. “The Debtors continue to believe strongly in the strength of their legal positions and are prepared to litigate their case to conclusion. However, as fiduciaries the Debtors must pursue all paths to bring these cases to a successful close. Accordingly, I write on behalf of the Debtors, the Debtors’ special litigation counsel, Dentons, and my co-counsel to respectfully request that this Court immediately appoint a mediator to help resolve the issues related to the EPC Litigation, upon the terms and subject to the timetable contained herein.”
The debtors requested that the court appoint Kevin Gross as the mediator. They contacted Gross recently to put the pieces for a structured mediation in place, and understand that Gross is willing to serve as a mediator.
“Although the Debtors are prepared to file a motion on an expedited basis if necessary, it is the Debtors’ sincere hope that by the time of the status conference all parties will have agreed to Judge Gross’s appointment as the mediator and the Court will consider the request favorably at the status conference,” the filing added.
Longview Power and related companies, including coal producer Mepco, are currently soliciting votes on their Chapter 11 reorganization plan and will continue to press the claims estimation litigation (and other related EPC Litigation issues) on the timelines set forth in the plan and the Debtors’ DIP Financing Facility. The bankruptcy companies said they cannot overstate the importance of moving towards emergence from Chapter 11 as quickly as possible.
“In that regard, the Debtors as fiduciaries for these estates have been involved in productive settlement discussions with certain Contractors,” the filing said. “However, the Debtors believe that it is extremely important to use every tool available to progress these cases in advance of the Debtors’ confirmation hearing to give the Debtors the very best chance to confirm their chapter 11 plan during their exclusive periods on the scheduled timetable. Accordingly, the Debtors are requesting mediation because based on their efforts to date, they believe that mediation may serve as a catalyst for settlement with one or more of the Contractors.”
The debtors are requesting appointment of a mediator through Feb. 1, which is shortly after the plan confirmation objection deadline but sufficiently in advance of both the hearing to estimate claims, which must begin on or prior to Feb. 7, and the confirmation hearing set for Feb. 10.