Calpine granted court OK of claims sell-down procedures, exclusivity extension

By Caroline Salls

Pittsburgh, Dec. 6 - Calpine Corp. obtained court approval for establishment of an effective date for notice and sell-down procedures for trading in claims against the company's estates to protect a potential $3.5 billion in net operating losses, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company also obtained court approval for the second extension to its exclusive periods to file a plan of reorganization and solicit votes on the plan.

According to the sell-down procedures motion, Calpine expects to emerge from bankruptcy with net operating loss carryovers and other tax attributes potentially exceeding $3.5 billion, while the federal and state tax savings generated by these NOLs could exceed $1.2 billion.

To date, Calpine said it and the official committee of unsecured creditors have agreed on most, but not all, of the terms of the proposed notice and sell-down procedures, and, thus, the terms remain subject to change.

Under the procedures, some substantial claimholders would be required to "sell down" unsecured claims to the extent necessary to allow the company to qualify for its tax savings.

Specifically, any holder of more than $340 million in unsecured claims against Calpine will be required to provide the company, its counsel and the committee's counsel with limited information regarding their holdings.

Claimholders with more claims than the specified threshold amount would be required to provide updated holdings information shortly after the date on which the court approves a disclosure statement for a plan of reorganization.

If a claimholder is required to sell down its holdings, the claimholder would have until shortly before the company emerges from Chapter 11 to sell any claims required to be sold.

In addition, claimholders would have notice that a sell down would be required well before the entry of a plan confirmation order.

If the required sell down has not occurred before the company emerges from Chapter 11, the claimholder would not receive any stock associated with the claims required to be sold down and any unsold claims would be extinguished.

The final hearing is scheduled for Feb. 7.

Exclusivity extension

The company's exclusive plan filing period was extended to June 20, 2007 from Dec. 31 and the solicitation period to Aug. 20, 2007 from March 31.

According to the motion, Calpine is preparing to create a business plan that will be the defining element of its restructuring and provide the platform for the company's reorganization plan.

Calpine has committed to completing the plan by December, according to the motion.

Once completed, Calpine estimates it will need about six months to distribute and build support for its business plan.

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.