Longview Power settles last issues with power plant contractors

Longview Power LLC filed with its bankruptcy court on Jan. 2 a notice of settlements with a title insurance company and two power plant contractors that should clear the way for this West Virginia power plant operator to emerge from chapter 11 protection.

“After nearly sixteen months of hard-fought litigation in these chapter 11 proceedings, more than three years of parallel litigation in the Debtors’ pending arbitration proceedings, multiple rounds of negotiation, and court-ordered mediation, the Debtors, the Settling Contractors, and First American have agreed to settle their disputes (collectively, the ‘Settlements’) in order to fully and finally resolve their differences,” said the notice filed with the U.S. Bankruptcy Court for the District of Delaware. “By this Motion, the Debtors seek approval of interlocking Settlement Agreements with each of FirstAmerican, Kvaerner, and Siemens, thereby resolving, among other things: (a) the status of the Debtors’ asserted rights to the Title Policy Proceeds available under the $775 million First American Title Insurance Policy, including the Debtors’ pending coverage action with respect thereto; (b) the more than $335 million of mechanics’ liens asserted by the Settling Contractors with respect to the Longview Power Facility (as defined herein) and related properties, and the pending state court actions seeking enforcement of the same; (c) the pending lien priority action commenced by First American in September 2014; and (d) the mutual claims asserted by and against the Debtors, First American, and each of the Settling Contractors.

“Perhaps more fundamentally, the Settlements are predicated on a substantial contribution of value by Siemens in the form of repairs, technical services, and related warranties for the turbine generator portion of the Longview Power Facility at no cost to the Debtors,” the filing said.

The Longview plant is a 700-MW (net) coal-fired facility that was built late last decade just north of Morgantown, W.Va., that Longview Power has said has not operated properly since then due to construction and mechanical problems. It had earlier worked out a settlement with the third power plant contractor, Foster Wheeler.

“In its totality, the global settlement implemented through the Settlement Agreements achieves key aspects of the Debtors’ goals for these chapter 11 cases: solving the material overhang to their capital structure arising from the Settling Contractors’ asserted mechanics’ liens, and providing a mechanism for implementing the comprehensive “fix” required for the Longview Power Facility,” the filing added. “And, in each case, such resolution will be achieved without the need to expend additional time and resources to further prosecute the pending arbitration between the Debtors, the Settling Contractors, and Foster Wheeler (together with the Settling Contractors, the “Contractors”) (with hearings scheduled to commence on January 19, 2015) (the “Arbitration”) and the Debtors’ title coverage action with First American (with trial scheduled to commence on January 20, 2015). Subject to the Court’s approval of the relief sought by this Motion, the Debtors anticipate proceeding with the confirmation process in the near term on a consensual basis with each of the major parties in interest in these chapter 11 cases—paving the way for the Debtors’ prospective emergence from chapter 11 near the end ofthe first quarter of 2015.”

The settlements are due for a Jan. 20 court hearing, with a Jan. 13 deadline for any party to object to them.

On Aug. 30, 2013, Longview Power and related companies, including coal producer Mepco LLC, sought protection under chapter 11 of the Bankruptcy Code.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.