La Paloma Generating disclosure statement OK’d; plan hearing Oct. 30

By Caroline Salls

Pittsburgh, Sept. 28 – La Paloma Generating Co., LLC received court approval of the disclosure statement for its amended Chapter 11 plan, according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for Oct. 30.

As previously reported, the amended plan incorporates a settlement reached with the company’s first-lien lenders.

The amended plan calls for the sale of La Paloma’s electric generating facility in McKittrick, Calif., and other assets to lender LNV Corp. in exchange for a $150 million credit bid of LNV’s first-lien claims, subject to the receipt of higher and better offers.

Under the first-lien settlement, La Paloma’s remaining assets, including all remaining cash and a tax refund claim, will be contributed to a liquidating trust.

According to the amended disclosure statement, the settlement avoids potentially costly litigation over avoidance causes of action and lien challenges against the holders of first-lien claims, LNV’s right to credit bid for the assets and the amount of its credit bid.

The amended plan provides that first-lien creditors will receive a share of either the credit bid, if LNV is the purchaser of the assets or the net sale proceeds if LNV is not the winning bidder, as well as a share of first-lien encumbered cash remaining after payment of administrative claims, a first-lien share of an unencumbered amount, payable in-kind or in cash, and the right to receive collateral or proceeds from collateral.

Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash.

Holders of other secured claims will either be paid in cash or receive the collateral securing the claims.

Holders of second-lien claims will receive a share of second-lien encumbered cash and, to the extent that does not pay the claims in full, a share of liquidating trust interests. The distribution to these creditors is subject to any turnover provisions included in an intercreditor agreement.

Holders of La Paloma general unsecured claims will receive a share of liquidating trust interests. Holders of general unsecured claims against other debtors will receive a share of specified sale proceeds.

Interests will be canceled and extinguished.

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

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