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Creditors fail to agree on reworking Energy Future Holdings Corp. finances

The possibility of reaching a deal that would streamline the bankruptcy process for Energy Future Holdings Corp. has been thrown into doubt after creditors were unable to come an agreement on how to rework the company’s finances Monday, according to a report from the Wall Street Journal.

Creditors have been working to come to an agreement that would make the company’s bankruptcy case less complicated, but were unable to agree on several issues. Citing people familiar with the talks, the Wall Street Journal reported one issue the creditors are at odds about is the value of a company known as Oncor that is owned by a subsidiary of Energy Future.

Oncor, which carries $6.6 billion of debt out of the more than $40 billion owed by Energy Future, operates the largest electricity distribution and transmission system in Texas, the Wall Street Journal reported. Although a series of transactions have separated the company from other parts of Energy Future’s businesses to an extent it will likely be kept out of bankruptcy court, the company must still be valued in a bankruptcy deal. Current valusations range between $15 billion and $18 billion, the Wall Street Journal reported people familiar with the talks said.

According to the report, more than a dozen creditors and Energy Future’s owners are attempting to come to terms by Nov. 1, when the company is obligated to make a debt payment of approximately $270 million to one group of creditors that more senior creditors don’t want to see paid. The more senior creditors would otherwise rank higher in line to be repaid in the event of a bankruptcy filing.

The creditors had agreed not to trade Energy Future debt during talks through Monday when confidentiality agreements expired, according to the Wall Street Journal. While that condition has been lifted for some people, advisers plan to continue negotiations and may encourage their clients to sign confidentiality agreements if a deal appears possible.

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