In compliance with Chapter 11 bankruptcy laws, Entergy New Orleans, a unit of Entergy Corporation, filed its proposed plan of reorganization with the U.S. Bankruptcy Court for the Eastern District of Louisiana.
The proposed plan of reorganization follows the company’s voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code that it filed in September 2005 after Hurricane Katrina.
“This plan represents a major milestone in our path out of bankruptcy. If the plan is approved, Entergy New Orleans could emerge from bankruptcy by the end of 2007,” said Dan Packer, President and CEO of Entergy New Orleans. “Reemerging as a financially stable utility, working shoulder-to-shoulder with the community to rebuild New Orleans, will benefit all of our customers.”
The proposed plan of reorganization follows efforts with federal, state and local regulators and lawmakers to gain support for Community Development Block Grants (GDBGs), rate relief, and insurance proceeds that are critical to the company’s emergence.
While the plan does not change ENO governance or the make up of its board, the filing does set out steps that must be achieved to support the company’s emergence from bankruptcy, including the receipt of $200 million of CDBGs, as approved by the Louisiana Recovery Authority and recommended by Gov. Kathleen Blanco; a final order by the New Orleans City Council concerning formula rate plan and storm rider applications; the creation of a storm reserve; and Entergy New Orleans’ receipt of insurance claim payments of approximately $250 million.
Entergy New Orleans will retain its assets under the plan of reorganization. Another key component states that the company’s first mortgage bonds and preferred and common shares will remain outstanding. Cash payments will be made to Entergy Corporation for the Debtor in Possession loan it provided and to unsecured creditors, while Entergy affiliates will receive notes for their claims. All employee and retiree programs and benefits will remain in place.
In addition, Entergy New Orleans has also filed its disclosure statement pursuant to which it will seek approval of the plan from its creditors and shareholders. The disclosure statement must first be approved by the Bankruptcy Court before the plan can be considered by Entergy New Orleans’ creditors and shareholders. While a hearing date has not yet been set, the company anticipates the disclosure statement will be considered by the Court later this year.
– David Wagman