Lawyers for Talen Energy and its creditors say they are “powering forward” toward a Dec. 15 confirmation hearing that will begin The Woodlands-based company’s exit from bankruptcy.
Talen and most of its creditors have until the end of business on Dec. 6 to obtain votes of approval of the proposed plan from claim holders. Opponents of the plan must file objections that same day, Dec. 6.
U.S. Bankruptcy Judge Marvin Isgur in Houston has scheduled a confirmation hearing for Dec. 15 at 9 a.m.
Talen, one of the largest competitive power generation companies in North America with 16 natural gas, nuclear and coal facilities in the U.S., filed to restructure under Chapter 11 in May citing about $4 billion in debt.
The proposed plan would reduce $1.4 billion in the company’s debt held by unsecured bondholders by converting it into equity
In court documents, Talen General Counsel Andrew Wright and the company’s lawyers at Weil, Gotshal & Manges said the company faced immediate and significant liquidity concerns that can be traced to the “sudden and sustained rise of natural gas prices in late 2021, which sharply increased the collateral requirements for the debtors’ hedging activities, resulting in an unexpected squeeze on available cash.”
Bankruptcy documents state that Talen and its creditors were involved in “extensive hard-fought, arms-length negotiations” that led to the proposed plan, which would reduce $1.4 billion in the company’s debt held by unsecured bondholders by converting it into equity. The plan also calls for Talen to raise another $1.9 billion through the sale of new equity shares.
The ad hoc group of secured of unsecured bondholders, led by Rubric Capital Management, Nuveen Asset Management, Two Seas Capital, Carronade Capital Management, Citadel Equity Fund and Franklin Advisors, is represented by Kirkland & Ellis and Houston lawyer Zack Clement.
To get Judge Isgur’s consent, Talen agreed to “continue to consider actionable proposals that would result in higher or otherwise better value” for the debtor and its claim holders.
Even after Judge Isgur approves the exit plan, Talen will need to obtain approval from the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission.
Besides Weil Gotshal and Kirkland, the list of law firms involved in the Talen bankruptcy include, Milbank, Quinn Emanuel, Akin Gump, King & Spalding, Pachulski Stang Ziehl, Susman Godfrey and Tucker Arensberg. The financial and restructuring advisors include FTI Consulting, Alvarez & Marsal, Evercore Group, Filsinger Energy Partners, PricewaterhouseCoopers, Deloitte & Touche, Moelis & Company and Houlihan Lokey Capital.
The case is In re Talen Energy Supply LLC, U.S. Bankruptcy Court for the Southern District of Texas, No. 22-90054.