Dynegy Inc. (NYSE: DYN) on July 6 voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York, Poughkeepsie Division. The Chapter 11 case of Dynegy’s wholly-owned subsidiary, Dynegy Holdings LLC (Dynegy Holdings) is pending in the same court. The filing was to facilitate an agreement between Dynegy Holdings and creditors.
In June, the U.S. Bankruptcy Court approved a $2.7 billion settlement between Dynegy Inc. and creditors who held claims against Dynegy Holdings. The settlement allows for Dynegy and Dynegy Holdings to merge, and for the administrative claim granted to Dynegy Inc. in the Dynegy Holdings bankruptcy case to be transferred out of Dynegy for the benefit of its shareholders. It is expected that upon completion of the merger, Dynegy Inc. will be the surviving entity, and all assets will then be held under a single holding company.
Dynegy subsidiaries that own and operate the company’s coal-fired and gas-fired businesses were separately financed during 2011 and are not included in the Chapter 11 filing. They will continue to operate their businesses in the ordinary course. Dynegy has sought customary first-day relief designed to ensure a smooth transition into Chapter 11 administration, which would ensure that the company has enough cash and liquidity to fund its continuing operations and all administrative obligations during the bankruptcy process.
Dynegy completed an internal restructuring to create separate coal- and gas-fired power generation units in August 2011 and transferred the assets to entities outside of Dynegy Holdings before Dynegy Holdings and four other subsidiaries filed for bankruptcy the following November. That move was believed to have kept the company’s shareholders and Dynegy Inc. from going through bankruptcy hearings. However, bondholders that had debts associated with leases for two power plants owned by Dynegy asked for an examiner to investigate the transfer of the assets.
For more information on the bankruptcy filings, click here.
Read more business news