Mirant's official creditors' committee objects to arbitration with Perryville

By Jeff Pines

Washington, Aug. 4 - Mirant Corp.'s official unsecured creditors' committee asked the U.S. Bankruptcy Court for District of Northern Texas to deny a request from the Atlanta-based energy company and Perryville Energy Partners LLC to arbitrate their differences.

"The sheer size of the claim alone - over $1 billion - should give the court pause before transferring jurisdiction over it to an arbitration tribunal," the committee said.

Companies that file Chapter 11 get a breather from creditors to reorganize, but if the court approves the arbitration it would violate the automatic break companies in Chapter 11 are entitled to, the committee said.

The committee wants Perryville's claim resolved through the bankruptcy code.

If the court does approve arbitration, the committee asked the court to hold off on approving it until the court-sanctioned mediation is completed on Aug. 13.

"In fact, arbitration may be completely unnecessary depending on the outcome of the mediation process," the committee said.

Perryville filed claims against Mirant for more than $1 billion when the company violated an agreement. Under that agreement, Mirant provided Perryville's plant with natural gas, which was converted into electricity for Mirant. When Mirant filed for Chapter 11, it threw Perryville into default on its construction loans and ultimately into Chapter 11.

Mirant filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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