Bankruptcy

Sonnenschein's Corporate Reorganization and Bankruptcy Group works closely with members of the firm’s Energy, Environmental, Real Estate, Corporate, Litigation and other practices on a wide variety of matters affecting the energy and utilities industries.  We have extensive experience addressing the complex issues at stake in restructuring or bankruptcies involving providers of electricity, natural gas, oil and other utilities or energy related companies, including:

• Automatic stay, adequate protection and cash collateral issues
• FERC, state utility and other regulation and the interaction with Bankruptcy Court processes
• Environmental regulations, consent decrees and priority of various environmental obligations
• Asset sales and the ability to sell free and clear of certain liens and claims, as well as the intersection with regulatory transfer requirements and oversight
• Treatment of long-term contracts, hedges and forward contracts
• Regulated rates and lobbying efforts
• Development of policy and legislation affecting new market structures
• Utility tariffs to allow customers to choose alternative providers of power and energy and to unbundle various utility services
• Implementing open access
• Excess facilities and contract plants/capacity

We have been involved in the bankruptcies or insolvencies of numerous independent and several major oil and gas industry providers.  We have also counseled clients on how to structure utility related transactions to minimize the risk of bankruptcy by one of the parties in the future.

The following is a summary of certain of the matters in which we have been actively involved and that are of a public nature.  There also are numerous representations and consultations in non-public matters that are not discussed by name herein.

Representative Engagements

In re Calpine Corporation:
We represent shareholders holding approximately 5 percent of the pre-emergence Calpine stock in their appeal of the confirmation order and a related order finding that the settlement of the valuation issue and the provision of warrants to shareholders was not a material modification of the plan.  Numerous other shareholders of Calpine have expressed their support for this appeal or joined.  One of the key issues in the case are the valuation and the methods by which the valuation was determined, including the value of the plants on a stand-alone basis.

TECO Energy, Inc./Union Power Partners, L.P.: 
TECO Energy, Inc. is a publicly traded, diversified energy-related holding company based in Tampa.  As a part of TECO’s major corporate reorganization, we represented two major debtholders in the Phoenix bankruptcy case of TECO subsidiary Union Power Partners, L.P.  The prepackaged chapter 11 plan involved restructuring two of the largest gas-fired utility plants in the United States.  Initially we opposed the proposed plan but ultimately obtained multiple concessions on behalf of our clients.  We dealt with many energy industry and FERC issues as part of this process. 

Philip Services Corporation: 
PSC is a major oil and gas industry service company with more than 40 affiliates.  PSC has extensive petrochemical plant cleaning operations, as well as a hazardous waste disposal business.  We represented PSC in its expedited Chapter 11 reorganization in Houston and a parallel reorganization of its Canadian affiliates under Canadian law.  The case included significant environmental issues, including abandonment of certain environmentally contaminated properties.

Coho Energy, Inc.: 
We represented an indenture trustee, who served on the Official Committee of Unsecured Creditors in the Coho Energy, Inc. bankruptcy case in Dallas, Texas.  Coho Energy Inc. is principally involved in the exploration and production of crude oil and natural gas.  Its activities are concentrated principally in Mississippi and Oklahoma with operations being conducted in nineteen major producing fields producing crude oil and natural gas.

Damson Oil Company: 
We represented an indenture trustee in connection with the chapter 11 case of New York-based oil and natural gas company, Damson Oil  The company’s reorganization involved the sale of natural gas properties in 24 states.

El Paso Electric Company: 
El Paso generates and distributes electricity throughout west Texas and southern New Mexico.  We represented a creditor of the company in its chapter 11 bankruptcy case in El Paso, Texas.  The case involved the City of Los Cruces, New Mexico’s efforts to condemn the company's electric distribution system for the municipality and turn it over to another company. Prior to joining the firm, a member of our practice also represented an indenture trustee as member of the Official Committee Unsecured Creditors and as trustee for second mortgage bond holders, which were amended and reinstated as a part of confirmed chapter 11 plan.

Pengo Industries, Inc.: 
Pengo was involved in various aspects of the oil field equipment and servicing markets before filing for chapter 11 bankruptcy protection in Fort Worth, Texas in order to restructure $144 million of secured debt.  We represented the Official Committee of Unsecured Creditors in this case, which involved the sale of three of its divisions.

O'Brien Environmental Energy, Inc.: 
We represented the Official Equity Committee in the chapter 11 bankruptcy case of this energy development company based in Philadelphia.  The case involved an auction of the estate’s assets and a bidding war in which the stalking horse bidder was ultimately outbid.  The bankruptcy court had refused to approve certain bid protection provisions requested by the debtor’s  bidder before proceeding with the auction, which meant the stalking horse bidder was denied payment of break-up fee and expense reimbursement.

TransTexas Gas Corporation:
Transtexas Gas Corporation, a subsidiary of TransAmerican Energy, is involved in natural gas and oil exploration, extraction and production, primarily in South Texas.  We represented one of the debtor’s major creditors in its chapter 11 case in Corpus Christi, Texas.