Liberty Power’s Chapter 11 plan of liquidation effective as of July 5

By Sarah Lizee

Olympia, Wash., July 11 – Liberty Power Holdings LLC’s Chapter 11 plan of liquidation went into effect on July 5, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Florida.

As previously reported, the plan, which was confirmed on June 21, provides for the distribution of available cash generated from the liquidation of the debtors’ assets and the settlement of causes of action.

Holders of administrative claims, professional fee claims, priority tax claims and other priority claims will be paid in full.

As part of a settlement reached with prepetition and debtor-in-possession lender Boston Energy Trading and Marketing (BETM), BETM has agreed to subordinate its DIP financing claims to payment for statutory fees, professional fee claims, administrative claims and priority claims.

After payment of the agreed senior claims, all available cash and proceeds of causes of action will be distributed by the reorganized debtors to BETM until the DIP financing claims, the adequate protection obligation and prepetition secured claim have been paid in full.

If there isn’t enough available cash to pay the agreed senior claims in full, then BETM will waive a distribution for its DIP financing claims.

The debtors will make additional distributions to BETM from available cash and proceeds from causes of action until its allowed prepetition secured claim is paid in full. The balance of its secured claim will be included in and treated as an allowed general unsecured claim.

Holders of general unsecured claims are not expected to receive anything under the plan.

The secured claim of the Hanover Insurance Co. was already paid in full.

The secured portion of Eckert Seamans Cherin and Mellot, LLC claim will be satisfied in full, and the balance of the claim will be included in and treated as an allowed general unsecured claim.

The Shell Energy North America (US), LP claim will be treated as an allowed general unsecured claim.

If the court grants a directors and officers settlement motion, each mezzanine lender will have provided a general release in favor of the debtors of any and all claims, including the mezzanine lender claims, and the mezzanine lender claims will be deemed satisfied in full.

In the event the court does not grant the settlement motion, then the entirety of each mezzanine lender claim will be treated as a general unsecured claim.

The Illinois Attorney General, as the holder of the class 8 allowed subordinated unsecured claim, will not receive any distribution.

Equity interests will be canceled with no distribution.

Liberty Power is an electricity retailer based in Fort Lauderdale, Fla. The company filed Chapter 11 bankruptcy on April 20, 2021 under case number 21-13797.

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