Optim Energy plan includes potential $355 million plant portfolio sale

By Caroline Salls

Pittsburgh, March 18 – Optim Energy, LLC filed a plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The plan calls for a potential sale of the company’s gas plant portfolio at a cash value of at least $355 million.

Competing bids are due by 3 p.m. ET on May 1.

Optim said the completion of a sale will likely not affect plan recoveries for general unsecured creditors. Based on expected sale proceeds, the company said pre-bankruptcy secured parties are expected to receive substantially less than a full recovery.

Despite the recovery expectations, the secured parties are consenting to the Optim estates’ funding of distributions to holders of allowed claims as long as they do not vote to reject the plan and they opt out of releases.

Holders of general unsecured claims against the liquidating debtors, convenience class claims and Walnut Creek claims will receive a distribution as long as they vote in favor of applicable subplans.

Debtor categories

According to the disclosure statement, the plan distinguishes between two categories of debtors, including reorganizing debtors Optim Generation, Cedar Bayou and Altura Cogen and liquidating debtors Optim Energy, Optim Marketing, OEM, Twin Oaks GP and Twin Oaks LP.

A distribution trust will be established on the effective date of the subplans for the reorganizing debtors. That trust will be funded with either cash proceeds from the sale or, if the sale does not close by Sept. 30, 2015, cash on hand and/or cash from any exit financing.

A liquidation trust will be established on the effective date of the subplans for the liquidating debtors. The liquidating trust will be funded with cash on hand.

Creditor treatment

Treatment of creditors will include the following:

• Debtor-in-possession financing claims, administrative claims and priority tax claims will be paid in full in cash to the extent not previously paid;

• Holders of Optim Generation pre-bankruptcy secured claims will receive payments from the distribution trust;

• Other secured claims will either be paid in full in cash, reinstated or holders will receive the collateral securing the claims;

• Reorganizing debtor other priority claims will be paid in full in cash, plus post-bankruptcy interest;

• Holders of reorganizing debtor general unsecured claims will be paid in full in cash from a reorganized debtors claims reserve;

• Optim Generation equity interests will be cancelled, extinguished and discharged. Either the purchaser or the pre-bankruptcy secured parties will receive equity interests in the reorganized company;

• Holders of Cedar Bayou pre-bankruptcy secured claims, Altura Cogen pre-bankruptcy secured claims will release their claims in exchange for trust distributions;

• Cedar Bayou equity interests and Altura Cogen equity interests will be reinstated solely to preserve the reorganized debtors’ corporate structure, and holders will receive no distribution;

• Holders of Optim Energy pre-bankruptcy secured claims will receive residual cash in a liquidating debtors wind-down reserve and any residual liquidating trust assets;

• Liquidating debtor other secured claims will be paid in full in cash from a claims reserve;

• Holders of liquidating debtor general unsecured claims will receive a share of $10,000 from a claims reserve if they vote to accept the plan and nothing if they reject it, except Twin Oaks LP creditors, which will receive a share of $80,000 if they vote to accept the plan;

• Holders of convenience class claims will receive $1,393 from a claims reserve if they vote to accept the plan and nothing if they reject it, except for Twin Oaks LP creditors, which will receive a share of $80,000 if they vote to accept the plan;

• Holders of Walnut Creek claims will receive a distribution if they vote to accept the Optim plan and nothing if they vote to reject it; and

• Holders of subordinated claims and liquidating debtor equity interests will receive no distribution.

A hearing on approval of the disclosure statement is scheduled for April 22.

Optim, a Silver Spring, Md.-based power plant owner, filed for bankruptcy on Feb. 12, 2014. The Chapter 11 case number is 14-10262.

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