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Southern Montana Electric committee joins push for removal of trustee
By Caroline Salls
Pittsburgh, Oct. 31 - Southern Montana Electric Generation and Transmission Cooperative, Inc.'s unsecured creditors committee joined cooperative member Fergus Electric Cooperative, Inc.'s motion for removal of the company's Chapter 11 trustee, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Montana.
The committee said it agrees with Fergus' reasoning that since the sole reason that the trustee was appointed in the first place, specifically a deadlock among cooperative members, has been resolved, the trustee should be removed and Southern Montana Electric allowed to determine its own fate.
The committee said it also agrees that the trustee's proposed plan of reorganization is unconfirmable, arguing that the plan depends on the court forcing the members to remain in business together against their will and pay whatever rates are required to fund the trustee's settlement with noteholders.
In addition, the committee said the trustee's plan is not confirmable because of unfair discrimination in favor of unsecured creditors CFC and First Interstate Bank, which are to be paid in full, and general unsecured creditors, who are to receive $.005 on the dollar.
According to the committee's joinder, the plan also violates the best interest of creditors test because the trustee has no intention of recouping the $3 million paid to the noteholders' professionals, which is virtually certain to occur in Chapter 7 and will occur if the members' liquidation plan is confirmed.
A hearing is scheduled for Nov. 12.
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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