Lincoln Power’s Chapter 11 reorganization plan effective as of Dec. 7

By Sarah Lizee

Olympia, Wash., Dec. 8 – Lincoln Power, LLC’s Chapter 11 plan of reorganization went into effect on Thursday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on July 27, as previously reported.

Lincoln Power started its Chapter 11 cases with a restructuring support agreement that allowed the company to pursue either a restructuring centered on a debt-to-equity swap or a sale of its assets.

The company later decided that an asset sale is the best available method for maximizing the value, and named Middle River Power VI LLC and Middle River Power VII LLC the winning bidders for its assets, with a bid of $26.25 million.

According to the disclosure statement, general administrative claims, professional fee claims, priority tax claims, other secured claims and other priority claims are unimpaired under the plan.

Holders of first-lien claims were to receive, in the event the purchaser was not a newly formed lender entity, a pro rata share of cash held by the obligor debtors after the sale closed, less cash to be distributed to holders of claims on the effective date and a cash reserve.

In the event the purchaser had been a lender entity, holders of first-lien claims would have received their pro rata share of new common equity and takeback debt, if applicable. Holders would also be given the right of first refusal to participate in an exit facility, if the required consenting lenders determined the facility should be entered into, on a pro rata basis.

Holders of general unsecured claims against non-obligor debtors were to receive cash and are unimpaired by the plan.

Holders of general unsecured claims against obligor debtors were impaired and were to receive their pro rata share of a $50,000 cash pool.

Section 510(b) claims, intercompany claims, intercompany interests and existing interests were to be canceled with no distribution.

The Charlotte, N.C.-based power company owns two gas-fired power-generation facilities in Illinois. The company filed Chapter 11 bankruptcy on March 31, 2023 under case number 23-10382.

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