Southern Montana Electric unsecured creditors agree to approve plan

By Caroline Salls

Pittsburgh, June 6 – Southern Montana Electric Generation and Transmission Cooperative, Inc. received court approval of a stipulation that clarifies and modifies the proposed treatment of general unsecured creditors in its plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the District of Montana.

Under the stipulation, holders of class four general unsecured claims will receive a share of $300,000 in cash in full satisfaction of their claims.

No member of the cooperative will be entitled to an unsecured claim distribution. Creditor PPL Energy Plus, LLC will only receive distributions under class eight of the plan, and no class four unsecured creditor will be entitled to any distribution for class eight claims.

In addition, all objections to confirmation of the plan filed by Southern Montana’s unsecured creditors committee will be deemed to be withdrawn, and the committee and its members will be deemed to have voted to accept the plan.

Under the original plan filed in March, the company said it would transfer Chapter 5 actions and rights to recovery for the benefit of general unsecured creditors, provided that the unsecured creditors could not recover more than $1 million without the consent of the members and noteholders.

The committee objected to the plan last week, arguing that the amount unsecured creditors would receive was less than what they would receive under a Chapter 7 plan of liquidation.

Southern Montana filed for bankruptcy on Oct. 21, 2011. The Billings, Mont.-based cooperative’s Chapter 11 case number is 11-62031.

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