Longview Power arbitration to continue minus Foster Wheeler issues

By Caroline Salls

Pittsburgh, Nov. 15 - Longview Power LLC and some of its contractors received court approval for a stipulation under which arbitration on pre-bankruptcy issues can continue, except for those related to the ownership and control of Foster Wheeler letters of credit, according to a Nov. 15 filing with the U.S. Bankruptcy Court for the District of Delaware.

The court granted an extension of the letters of credit to June 30, 2014 and stayed all letter-of-credit proceedings without prejudice.

In addition, the Longview Power debtors are prohibited from demanding or drawing down on the letters of credit until at least 48 hours after the court rules on a determination motion or letter-of-credit pleadings allowing the draw-down.

As previously reported, Longview and three of its contractors have been entangled in a dispute over the $59 million of letters of credit for six years and have been involved in arbitration for two years.

At issue is whether Longview holds the letters of credit or assigned them to a consortium involved in a $2 billion project that included the construction and operation of a coal mining operation and a coal-fired power plant.

Longview is seeking authority to tap the letters of credit for operations during the bankruptcy case. The company is operating on lenders' cash collateral and said last month that it projects it will run out of funds by the end of November.

Three contractors involved in the mining and power plant project - Siemens Energy, Inc., Foster Wheeler North America Corp./Foster Wheeler AG and Kvaerner North American Construction Inc. - argue that the letters of credit belong to the consortium.

Longview and Mepco, an integrated power generation enterprise based in Maidsville, W.Va., filed for bankruptcy on Aug. 30. Their Chapter 11 case number is 13-12211.

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