Calpine granted court OK of Mankato construction project dispute settlement

By Caroline Salls

Pittsburgh, Sept. 21 - Calpine Corp. debtor Calpine Construction Management Co., Inc. obtained court approval of a settlement agreement with The Industrial Co. Wyoming Inc. in connection with Mankato Energy Center construction project disputes, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, Calpine Construction was created in 2004 to coordinate construction as general contractor for Calpine's energy projects, including the Mankato Energy Center project.

The project is now completed and is providing electricity under a long-term "off-take" agreement.

Industrial is a subcontractor hired to assist in building the Mankato property.

Since the inception of the project, Calpine said there have been disagreements between the parties under their sub-contract regarding the proper allocation of responsibilities.

Industrial alleges that Calpine Construction caused various delays and defaults under the sub-contract, and Industrial has filed a $7.98 million proof of claim on account of a price dispute.

Calpine Construction also has claims against Industrial regarding its performance, liquidated damages and adjustments and credits to the contract price under the sub-contract.

Calpine said Industrial might also file a mechanics' lien on the Mankato property, which Calpine would fight, but could lead to a default under project financing agreements.

Under the settlement:

• The sub-contract will be amended to increase the agreement amount by $5.08 million, for a total agreement amount of $14.75 million;

• Calpine Construction will release $435,000 to Industrial, which was previously withheld under the liquidated damages provision of the sub-contract; and

• Both parties will mutually release any and all claims in connection with the sub-contract, the agreement amount dispute, the performance dispute or the Industrial claims, provided, however, that the released claims will not include any Calpine Construction claims against Industrial for breach of any warranty or default under the sub-contract occurring after the settlement date.

Calpine, a San Jose, Calif.-based power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.

© 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.