As illustrated by a pair of May 22 bankruptcy court filings, Longview Power LLC has a ways to go to settle issues with two of the contractors that built late last decade the coal-fired Longview power plant in northern West Virginia.
Longview Power and related companies, including Northern Appalachia coal producer Mepco LLC, sought Chapter 11 protection in August 2013 at the U.S. Bankruptcy Court for the District of Delaware. Part of the reason it sought bankruptcy is operating problems at the 700-MW (net) Longview plant. The company has settled issues with one of the project contractors, Foster Wheeler, but is still battling with two others.
On May 22, one of the two holdout contractors, Kvaerner North American Construction, objected to a motion by the bankrupt companies for entry of an order approving the debtors’ continued solicitation of creditor support of an amended reorganization plan that was filed at the court on May 2.
“The Amended Plan is clearly a new plan,” Kvaerner wrote. “The sole question remains whether or not such new plan is simply window dressing on the same failed strategy as with the Original Plan. The Original Plan provided that under certain conditions Kvaerner would receive cash in full satisfaction of its senior secured claim. The Amended Plan basically says the same thing – perhaps less appealing than cash: under certain conditions Kvaerner will receive cash from an insurance trust or a note with unknown terms.”
It added: “Is this new ‘amended’ plan better or is it the same failed attempt as the previous plan, except with new, more creative window dressing? The answer to this question cannot be determined at this time because the Disclosure Supplement fails to contain adequate information for Kvaerner (and thus, other creditors) to understand what the Amended Plan seeks to accomplish and how it will set out to do it. Unless and until the Disclosure Supplement is substantially amended to address and resolve these numerous unknowns, this Court should not approve the Continued Solicitation Motion.”
The other objecting contractor with skin in this game is Siemens Energy, which filed a similar complaint on May 22 about the disclosure statement that accompanied the amended reorganization plan. It said the amendment has a number of issues, including:
- The disclosure statement supplement does not make clear what will be the status of votes already cast for or against the original plan in the event of no vote or of a conflicting vote on the amended plan.
- The actions or proceedings pending between Longview Power and Siemens in this bankruptcy case include the estimation motion, an objection to Siemens’ proof of claim which the debtor had indicated separately would not be set for hearing, and an adversary proceeding seeking to limit the extent of Siemens’ mechanic’s liens. The motion states that the estimation motion will be held in abeyance, but this is not repeated in the supplement. The supplement also doesn’t discuss Siemens’ claim objection or the adversary proceeding.
Longview has said it hopes to emerge from bankruptcy in the third quarter of this year, based on a reorganization plan that basically turns the company over to creditors in a debt-for-equity swap. The next scheduled ominbus hearing in the case is on May 29.