Empire Generating minority lender calls on court to appoint mediator

By Caroline Salls

Pittsburgh, Aug. 26 – Empire Generating Co., LLC creditor SPTIF Parent, LLC (Starwood) is asking the U.S. Bankruptcy Court for the Southern District of New York to appoint a mediator for Empire’s Chapter 11 case, according to a motion filed Monday.

Starwood said it was not directly involved before Empire’s bankruptcy filings in the negotiations between the two principal creditors in this case, funds affiliated with Ares Management Corp. and funds affiliated with Black Diamond Capital Management.

However, since the bankruptcy filing, Starwood said the cases have “become increasingly contentious,” and it has made efforts to try to help the parties discuss points of disagreement with the goal of achieving a consensual exit from Chapter 11 that would avoid continued litigation.

“Starwood believes that these Chapter 11 cases are now at a point where the assistance of a mediator can further this objective and result in a negotiated resolution of the few remaining issues,” the motion said.

According to the motion, the fundamental dispute in the Empire cases are the rights that minority lenders Ares and Starwood should have following any restructuring.

Specifically, Starwood said the minority lenders believe that in any restructuring that extinguishes their secured debt claims in exchange for equity in a limited liability company in which the rights of equity are determined solely by the terms of an operating agreement, there should be fundamental minority protections regarding affiliate transactions, preemptive rights on new equity, information reporting, tag-along rights and board fiduciary duties.

“Without assurance on minimal minority governance protection as of the effective date of a plan, the minority lenders are forced to object to a nonconsensual restructuring under Chapter 11 by all proper means,” Starwood said in its motion.

Empire Generating is the owner of a large natural-gas fired power plant in Rensselaer, N.Y. It filed for bankruptcy on May 9 under Chapter 11. The case number is 19-23007.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.