Optim Energy creditor looks to prosecute $700 million lender claims

By Kali Hays

New York, April 14 - Walnut Creek Mining Company, on behalf of Optim Energy, LLC, is seeking court approval to prosecute $700 million of claims made by Cascade Investment, L.L.C. and its subsidiary ECJV Holdings, LLC, according to a motion filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

As Optim's largest non-insider creditor, Walnut Creek is pursuing the claims on Optim's behalf because Cascade is Optim's debtor-in-possession lender and, therefore, Optim cannot assert claims against it.

Walnut Creek is accusing Cascade of an "inequitable scheme" and aiding and abetting ECJV in the "breach of its fiduciary duties," according to the motion.

Specifically, Walnut Creek and Optim claim that Cascade changed its equity to a secured lien through a 2007 reimbursement agreement that was forcibly triggered after Optim filed for Chapter 11 relief, and Cascade took security interests in substantially all of Optim's assets to secure the reimbursement obligations.

Walnut Creek said this action led to Cascade "effectively transforming themselves from mere equity holders to senior secured lenders with a claimed lien on substantially all of the debtors' assets," according to the motion.

The company said that if the court does not allow the prosecution of the claims, Cascade will "seize all of the value of the debtors' estates, leaving unsecured creditors with little or nothing in the way of recoveries" and that "the costs incurred in pursuing such claims pale in comparison to recognizable value, even when discounting the inherent uncertainty of litigation."

Optim, a Silver Spring, Md.-based power plant owner, filed bankruptcy on Feb. 12. The Chapter 11 case number is 14-10262.

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