Energy Future PIK notes interest, premium payment objections upheld

By Caroline Salls

Pittsburgh, Oct. 30 – Energy Future Holdings Corp.’s EFIH debtors’ objections to portions of a $1.57 billion payment-in-kind notes claims that call for payment of premiums and post-bankruptcy interest were sustained Friday by the U.S. Bankruptcy Court for the District of Delaware.

The PIK notes claim was filed by UMB Bank, NA as indenture trustee for the 11 ¼%/12 ¼% senior toggle notes due 2018 issued by Energy Future Intermediate Holding Co. LLC and EFIH Finance Inc.

In the ruling on the interest payment objection, judge Christopher S. Sontchi said the PIK claim is limited to the principal and accrued fees and interest due as of the EFIH debtors’ bankruptcy filing date and excludes unmatured, post-bankruptcy interest.

In addition, Sontchi said Energy Future’s plan does not need to provide for payment of interest. However, in order for the PIK noteholders to be unimpaired, the judge said the plan must clarify that the court can award post-bankruptcy interest if it decides to do so.

Meanwhile, Sontchi said in the premium payment objection ruling that he recently addressed “virtually identical language” in an order denying payment of make-whole premiums on the EFIH debtors’ first-lien notes.

“The inclusion of the ‘premium, if any’ and ‘other monetary obligations’ language in the PIK indenture, which was not present in the first-lien indenture, does not change the analysis,” Sontchi said in Friday’s ruling.

Energy Future, a Dallas-based power generation company and utility operator, filed bankruptcy on April 29, 2014. The Chapter 11 case number is 14-10979.

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