La Paloma Generating lender LNV opposes extension, wants to file plan

By Caroline Salls

Pittsburgh, June 19 – La Paloma Generating Co., LLC lender and largest creditor LNV Corp. objected to the company’s proposed exclusivity extension, arguing that “there is no prospect of reorganization in these cases,” according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

LNV said the company has no employees and outsources all of its operations. In addition, LNV said La Paloma exists solely to own four power blocks in McKittrick, Calif., and distribute the profits to equityholders.

According to the objection, the McKittrick facility needs to be sold and the proceeds distributed, and “the only point up for debate is how to distribute the proceeds of any such sale.”

“LNV simply wants the proceeds of a sale of the facility to be distributed in accordance with the Bankruptcy Code,” the objection said. “However, the debtors seek concessions (for the benefit of out-of-the-money stakeholders, including holders of existing equity) that LNV has no obligation to provide.”

Since La Paloma is not willing to “engage with LNV on realistic terms, these cases remain deadlocked,” the objection said.

LNV said the only solution is to terminate the company’s exclusivity and allow the lender to propose its own Chapter 11 plan.

“Given the debtors’ intransigence, the debtors’ request for an extension of exclusivity would only result in additional wasted time and resources,” LNV said.

A hearing is scheduled for June 26.

La Paloma is a 1,022 MW combined-cycle gas-fired power plant located in Kern, Calif. The company filed bankruptcy on Dec. 6, 2016 under Chapter 11 case number 16-12700.

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