Calpine requests dismissal of Towantic Energy's Chapter 11 case

By Reshmi Basu

New York, July 20 - Calpine Corp. asked a judge to dismiss the Chapter 11 bankruptcy case of one of its entities, Towantic Energy LLC, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Towantic is a holding company for a 512-megawatt combined cycle gas-fired power plant in Oxford, Conn. According to the motion, Towantic has no assets, other than a construction site and various construction permits and agreements with the town of Oxford.

In addition, the project is in the early stages of development and has never had any employees.

As part of its post-bankruptcy analysis, Calpine decided it was in its best interest to exit the project due to significant construction costs, according to the filing.

After months of arms-length negotiations, Calpine and General Electric Co. inked a membership interests purchase agreement for the project.

According to the agreement, G.E. would pay $300,000 in cash to Calpine on the closing day and assume certain liabilities of Towantic's. GE would pay an additional $2.35 million if the project is completed.

Furthermore, GE would withdraw its $6.5 million claim against Calpine.

Calpine said the proposed sale is contingent upon the court's dismissal of Towantic's Chapter 11 case.

"Waiting for Towantic's Chapter 11 plan of reorganization to be confirmed is not in any party's best interest," the company said in the document.

The hearing is scheduled for Aug. 9.

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

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