Empire Generating creditors claim resignation further justifies stay

By Caroline Salls

Pittsburgh, Oct. 29 – Empire Generating Co., LLC creditors ASSF IV AIV B Holdings III, LP, AEIF Trade, LLC (Ares) and SPTIF Parent, LLC (Starwood) said in a motion supplement filed Monday with the U.S. Bankruptcy Court for the Southern District of New York that the resignation of Empire’s lender agent further justifies their request for a stay of orders approving an interest sale and confirming Empire’s Chapter 11 plan.

As previously reported, Ares and Starwood asked the court to stay orders approving the sale of membership interests in Empire Gen Holdings, LLC and confirming the company’s plan pending outcome of an appeal.

Ares and Starwood said Empire Generating president and chief executive officer Garrick Venteicher admitted that the company was aiming to avoid having them vote on a Chapter 11 plan.

The creditors said they stand to receive under the plan equity in an entity that is worth substantially less than the amount of their secured debt. As a result, Ares and Starwood said they should legally be entitled to vote on the plan.

“Despite appellants’ right to vote on this reorganization, debtors, working with majority lender Black Diamond Capital Management, LLC, unlawfully seek to sideline appellants through an overvalued, one-sided and misused credit bid,” the stay motion said.

Ares and Starwood said they know the bankruptcy court disagrees with them on their legal rights, but they feel their appeal will be successful.

In Monday’s supplement, the creditors said credit agreement agent Ankura Trust Co. resigned on Oct. 24, but the agent is the entity in charge of carrying out the credit bid “that is at the center of debtors’ improper reorganization.”

“That Ankura has abruptly resigned raises red flags about the efforts of debtors and Black Diamond to push through the sale and consummation of the plan, and it confirms that a stay is warranted to permit fulsome appellate review before those events take place,” the supplement said.

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.

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