Calpine pre-bankruptcy lender requests stay of DIP order pending appeal

By Caroline Salls

Pittsburgh, Feb. 7 - Calpine Corp. pre-bankruptcy lender DZ Bank AG, Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main, New York Branch requested a stay of the approval of the company's $2 billion debtor-in-possession facility pending appeal, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The bank appealed the DIP approval order on Friday.

According to the motion, the court approved the DIP facility despite the fact that there was no showing that any project debtor will directly benefit from it.

The bank also said there was nothing showing that the directors of Calpine unit MEP Pleasant Hill, LLC, who owe a fiduciary duty MEP's creditors, exercised any independent judgment to approve the DIP facility or consider the severe negative impact of the DIP facility on the company and its creditors.

In addition, the bank said Calpine conceded that there is no assurance that any DIP proceeds will be used by or allocated to MEP, notwithstanding its pledge of all its assets and its equity.

A hearing on the stay pending appeal is scheduled for Feb. 22.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20. Its Chapter 11 case number is 05- 60200.

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