Judge orders Reliant Energy Channelview partner, parent to mediate asset sale disputes

By Caroline Salls

Pittsburgh, May 8 - A federal judge has ordered Reliant Energy Channelview LP parent Reliant Energy Inc. and Equistar Chemicals, LP to mediation in connection with their disputes over the proposed sale of Reliant Energy Channelview's assets to GIM Channelview Cogeneration, LLC, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

Equistar owns and operates a petrochemical plant that uses steam from the company's Channelview, Texas, facility to produce ethylene and various co-products.

Judge Mary F. Walrath ordered the parties to mediation in response to Reliant Energy Channelview's request for appointment of a Chapter 11 trustee to oversee its bankruptcy case.

If the mediation is not successful, Walrath said she will schedule a hearing to consider the Chapter 11 trustee appointment motion.

As previously reported, after extensive efforts to sell the company's assets, the court ruled at an April 9 sale hearing that a contract that was expressly excluded from the asset purchase agreement was not severable from other contracts to be assigned to the potential buyer.

Reliant Energy Channelview said this ruling significantly impacted key provisions of the asset purchase agreement and has jeopardized the company's ability to complete the proposed sale.

Since April 9, the company said it has been considering its options and trying to formulate a go-forward plan.

Reliant Energy Channelview said it has decided that appointment of a Chapter 11 trustee is in the best interest of the company and its creditors and equity holders.

The company said it sees a potential divergence of interest between Reliant and its equity holders, and it wants to "avoid even the appearance of impropriety in these proceedings."

Reliant subsidiary Reliant Energy Channelview, a Houston-based provider of electricity and energy services to retail and wholesale customers, filed for bankruptcy on Aug. 20, 2007. Its Chapter 11 case number is 07-11160.

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