Former Footprint Power moves to avoid $237 million judicial lien

By Sarah Lizee

Olympia, Wash., May 18 – Salem Harbor Power Development LP, formerly Footprint Power Salem Harbor Development LP, filed an adversary proceeding on Tuesday that seeks to avoid a $237 million judicial lien in favor of Iberdrola Energy Projects, Inc., according to court documents filed with the U.S. Bankruptcy Court for the District of Delaware.

In 2014, Footprint hired Iberdrola to build a 674-MW combined-cycle electric generating facility in Salem, Mass. Footprint later terminated the construction contract, and Iberdrola began an arbitration proceeding against the company. After three years of litigation, Iberdrola won the arbitration with an award of $237 million.

Footprint said that with the possibility of a judgment enforcement, foreclosure or other adverse action, the protection of Chapter 11 became necessary.

Iberdrola obtained and filed a writ of execution to perfect a judicial lien just hours prior to the petition, however.

“Had [the debtor] commenced its widely expected Chapter 11 case several hours earlier, the judgment that gave rise to the judicial lien would have constituted a general unsecured claim,” the company said in the court documents.

“Accordingly, the judicial lien represents an eleventh-hour windfall to [Iberdrola] at the expense of all other general unsecured creditors.”

The debtor said that it had inked a restructuring support agreement that outlined creditor treatment before Iberdrola held the judicial lien, and when it only held a general unsecured claim. As such, the company’s current Chapter 11 plan treats Iberdrola’s claims against each debtor as class 4 general unsecured claims.

The company said it has tried to engage Iberdrola in good-faith discussions regarding a consensual resolution, but the parties didn’t come to mutually acceptable terms.

The Salem, Mass.-based power plant operator filed bankruptcy on March 23 under Chapter 11 case number 22-10239.

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