Longview Power boiler claimants object to new plan of reorganization

By Kali Hays

New York, May 22 - Longview Power, LLC's request to continue solicitation of votes on an amended plan of reorganization has drawn objections from claimants Kvaerner North American Construction Inc. and Siemens Energy, Inc., according to separate May 22 filings with the U.S. Bankruptcy Court for the District of Delaware.

Kvaerner objected to the treatment of its senior secured claim, which under the amended plan will be paid with "cash from an insurance trust or a note with unknown terms," and said that the amended plan may be "simply window dressing on the same failed strategy as with the original plan," according to the objection.

Siemens holds a mechanics lien against the company and objected to the plan based on the lack of information establishing the secured status of the lien.

As previously reported, Longview has been in legal proceedings regarding operations issues and longstanding disputes with Kvaerner, Siemens and Foster Wheeler North America Corp. stemming from a coal-fired boiler that Foster Wheeler agreed to build for Longview in January 2007.

The company entered into an approved settlement with Foster Wheeler in March, resolving all claims between the parties, which Kvaerner also objected to.

Longview said the amended plan was negotiated with backstoppers and other parties in interest and incorporates a modified structure that will facilitate the resolution of pending mechanics' lien claims asserted by Siemens and Kvaerner without the necessity of claims estimation by the court.

Specifically, under the amended plan:

• By agreement with the backstoppers, the Longview credit agreement collateral agent will contribute proceeds from the $825 million available under an insurance policy obtained for the Longview lenders' benefit to an insurance trust;

• If Siemens and Kvaerner are ultimately determined to have allowed claims senior to liens securing the Longview credit agreement claims, such claims will be satisfied in full with cash distributions from the insurance trust;

• The debtors' claims estimation process will be held in abeyance during the pendency of the continued solicitation and confirmation process; and

• The debtors will file an action to confirm the availability of coverage under the insurance policy in the near term.

The company is proposing a Sept. 2 plan confirmation hearing. Longview said it hopes to emerge from bankruptcy in the third quarter.

Based on the objections, Kvaerner and Siemens asked the court to deny approval of the amended disclosure statement and related plan until all "non-confirmable elements" are removed.

A hearing is scheduled for May 29.

Longview, an integrated power generation enterprise based in Maidsville, W.Va., filed for bankruptcy on Aug. 30, 2013. The Chapter 11 case number is 13-12211.

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