La Paloma Generating withdraws procedures motion, files amended plan

By Caroline Salls

Pittsburgh, Sept. 22 – La Paloma Generating Co., LLC withdrew its motion for approval of the bid procedures for the sale of substantially all of its assets, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

In addition, the company filed amended versions of its Chapter 11 plan and related disclosure statement to incorporate a settlement reached with its first-lien lenders.

On Sept. 15, the court ruled that La Paloma must file the amended plan reflecting the settlement terms by Sept. 22 to avoid termination of its exclusive periods for filing and soliciting votes on a plan. The amended documents were filed on Sept. 21.

As previously reported, if La Paloma’s exclusivity was terminated, first-lien lender LNV Corp. would have the right to file and solicit votes on a competing plan.

The exclusivity termination stipulation is subject to La Paloma’s ability to establish that LNV did not negotiate in good faith in connection with the amended plan.

The amended plan calls for the sale of La Paloma’s electric generating facility in McKittrick, Calif., and other assets to LNV in exchange for a $150 million credit bid of LNV’s first-lien claims, subject to the receipt of higher and better offers.

Under the first-lien settlement, La Paloma’s remaining assets, including all remaining cash and a tax refund claim, will be contributed to a liquidating trust.

According to the amended disclosure statement, the settlement avoids potentially costly litigation over avoidance causes of action and lien challenges against the holders of first-lien claims, LNV’s right to credit bid for the assets and the amount of its credit bid.

Also under the amended plan, treatment of first-lien claims was modified.

Specifically, first-lien creditors will now receive a share of either the credit bid, if LNV is the purchaser of the assets or the net sale proceeds if LNV is not the winning bidder, as well as a share of first-lien encumbered cash remaining after payment of administrative claims, a first-lien share of an unencumbered amount, payable in-kind or in cash, and the right to receive collateral or proceeds from collateral.

Under the previous version of the plan, first-lien creditors were slated to receive acquired collateral and the first-lien encumbered cash.

La Paloma is a 1,022 MW combined-cycle gas-fired power plant located in Kern, Calif. The company filed for bankruptcy on Dec. 6, 2016 under Chapter 11 case number 16-12700.

© 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.