The Walnut Creek Mining affiliate of Kiewit lost a March 13 U.S. Distriict Court decision related to its creditor status in the Chapter 11 bankruptcy case of Optim Energy LLC.
Walnut Creek Mining had a contract to supply minemouth lignite to Optim’s Twin Oaks power plant in Texas. That contract got wiped away last year as part of the U.S. Bankruptcy Court for the District of Delaware’s approval of the sale of the Twin Oaks plant to another party. Walnut Creek is Optim’s largest unsecured creditor.
The bankruptcy court last year also approved certain debtor-in-possession (DIP) financing that left an Optim founder, Cascade Investment LLC, with what amounts to a stronger legal right to Optim assets through it being a “secured” creditor. Walnut Creek appealed that order to the U.S. District Court for the District of Delaware, which on March 13 turned back the appeal. The District Court agreed with the bankruptcy court that Walnut Creek did not “sufficiently state a claim for relief for equitable subordination.”
A copy of that March 13 decision, by the way, was filed on March 16 at the bankruptcy court.