Massachusetts natural gas plant files for Ch. 11 after arbitration loss

Salem Harbor Electric power Station, a normal gas-fired electricity plant operated by Footprint Energy, stands in Salem, Massachusetts, on March 24, 2022. REUTERS/Nate Raymond

(Reuters) – Purely natural gas-fired electrical power plant operator Footprint Electrical power Salem Harbor Development LP filed for Ch. 11 bankruptcy protection on Wednesday soon after it was requested to pay back $236 million in a longstanding dispute about the building of its key facility.

The Salem, Massachusetts-based enterprise reported $337 million in secured financial debt in addition to the arbitration award in favor of Spanish corporation Iberdrola Electricity Assignments Inc. in court docket papers submitted in the U.S. Bankruptcy Court docket for the District of Delaware.

Footprint Electricity, which is owned by Oaktree Cash Management-operate cash, has created a preliminary restructuring proposal under which it will either transfer its equity to its lenders or obtain an outside consumer. The course of action of advertising the company’s property and acquiring intrigued bidders is ongoing, according to court docket papers.

Iberdrola and Footprint Energy signed an arrangement in 2014 for the design of the electricity plant in Salem for about $702 million. Footprint Power contends that more than the course of the venture, it started seeing increasing expenditures, delays and problems arising from subcontractors and job administration. The enterprise blamed Iberdrola’s “mishandling of the project” for the issues, in accordance to a penned declaration from its main restructuring officer, John Castellano.

Footprint Electric power terminated the agreement in April 2018. IEP then launched arbitration proceedings, asserting promises of wrongful termination and seeking $575 million in damages.

An arbitration panel issued the $236 million judgment in favor of Iberdrola in Oct 2021. A New York courtroom verified the award in December.

A agent for Iberdrola and a attorney for Footprint Electrical power did not straight away reply to requests for remark.

The Iberdrola dispute led to quite a few occasions of default underneath Footprint Power’s main credit history agreement. Shortly just after the arbitration award was issued, the loan agent transferred about $90 million from the company’s accounts and utilised it to pay back down principal on the financial loan, leaving the company with about $27.5 million in obtainable funds.

Iberdrola and Footprint Ability signed a new settlement in January underneath which Iberdrola reported it would hold off on its initiatives to obtain the judgment. But it explained to Footprint Electricity very last week that it planned to terminate that agreement on March 23, Castellano explained, which prompted Footprint Energy to file for Chapter 11 defense.

A listening to on a series of administrative and operational matters is scheduled for Friday prior to U.S. Personal bankruptcy Decide Mary Walrath.

Footprint Electrical power in the long run accomplished the development of the facility, which has been operational considering the fact that May well 2018. The firm noted about $195 million in profits for 2021.

The situation is In re Footprint Electric power Salem Harbor Progress LP, U.S. Personal bankruptcy Courtroom, District of Delaware, No. 22-10239.

For Footprint Electrical power: Brian Hermann, John Weber and Alice Nofzinger of Paul Weiss Rifkind Wharton & Garrison and Pauline Morgan and Andrew Magaziner of Young Conaway Stargatt & Taylor

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