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Ector County Energy’s DIP facility draws objection from Direct Energy
By Sarah Lizee
Olympia, Wash., May 24 – Ector County Energy Center LLC’s proposed $5 million post-petition financing drew an objection on Tuesday from Direct Energy, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.
Direct Energy said that in “yet another example of overreach,” the debtor is seeking the financing from its insider and indirect parent, Invenergy Thermal Operating I LLC, in exchange for waivers, releases, liens and repayments that Direct Energy claims are inappropriate.
Direct Energy also said the loan will be used to pay about $2 million in professional fees, and about $3 million in cash collateral postings, both for the benefit of Invenergy.
“Invenergy’s scheme to sell the debtor’s assets in bankruptcy to pay down its own debt created the purported need for the DIP loan, which will be extended by Invenergy itself in exchange for inappropriate and unsupportable concessions including, most importantly, the broad waivers and releases of numerous insiders and the Invenergy secured lenders,” the objector said.
Background
As previously reported, Ector was party to a heat rate call option (HRCO) which provided for Direct Energy to pay a monthly premium to Ector for the right to call on the debtor to produce energy and various quantities of ancillary services.
Ector said the conditions of winter storm Uri resulted in it being unable to deliver power or ancillary services, ultimately leading to the purported termination of the HRCO by Direct Energy in May 2021, when Direct Energy disputed the debtor’s assertion of a “force majeure” event.
Ector had said that Direct Energy began litigation in the New York Supreme Court asserting a claim for damages of over $400 million, of which $393 million was alleged to be owed for February 2021.
Direct Energy said in its objection that from its perspective, the debtor’s Chapter 11 case is “very different” from how it has been presented to the court.
Direct Energy said the debtor is governed by a special committee 80% dominated by representatives of the debtor’s parent, Invenergy.
Goldsmith, Tex.-based Ector owns and operates a 330 MW natural gas-fired electricity-generating facility. The company filed Chapter 11 bankruptcy on April 11 under case number 22-10320.
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