Southern Montana Electric trustee settles Yellowstone Valley claim

By Caroline Salls

Pittsburgh, Jan. 22 - Southern Montana Electric Generation and Transmission Cooperative, Inc.'s Chapter 11 trustee requested court approval of a $2.5 million settlement with member Yellowstone Valley Electric Cooperative, according to a Friday filing with the U.S. Bankruptcy Court for the District of Montana.

In addition, Chapter 11 trustee Lee A. Freeman is asking the court to approve the partial assumption and assignment of a contract with Western Area Power Administration for firm electric service to Southern Montana Electric.

Freeman said Yellowstone entered into a wholesale power contract with Southern Montana Electric in 2004 and filed a lawsuit against the cooperative in December 2008. The lawsuit was stayed by the company's bankruptcy filing.

Yellowstone also filed a general unsecured claim for $7.28 million against Southern Montana Electric, plus alleged undetermined amounts.

Freeman said the settlement resolves all matters between trustee, the cooperative and Yellowstone, including those arising from the power contract, the lawsuit, a related appeal, the proof of claim and the Western contract.

Under the proposed settlement, Yellowstone will pay $2.5 million to the Southern Montana Electric bankruptcy estate, will withdraw its proof of claim and will cease to be a member of the cooperative.

Also under the settlement, the appeal and lawsuit will be dismissed, and the Yellowstone contract will be terminated, effective April 30.

The Western contract will be partially assumed, and nine mega-watts of power under that contract will be assigned to Yellowstone, subject to the approval of Western's administrator.

Southern Montana filed for bankruptcy on Oct. 21, 2011. The Billings, Mont.-based cooperative's Chapter 11 case number is 11-62031.

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