Bill Gates is best known for co-founding Microsoft – the world’s largest personal computer software company – with Paul Allen. But Gates also invests in numerous other ventures, including , which recently filed for protection under Chapter 11 of the federal bankruptcy law.
The Texas electric company is owned by a Bill Gates investment fund, and has been building losses in the struggling power market, according to Reuters. Optim owns three power plants in eastern Texas, and was unable to lower costs enough to offset financial losses, which led to the bankruptcy filing.
“The current depressed economic environment of the electric power industry – particularly with respect to coal-fired plants- and the Debtors’ liquidity constraints have resulted in continuing losses that, simply put, have left the Debtors without alternatives,” Optim Chief Executive Officer Nick Rahn said in court papers.
In its court filing, Optim said it may have to sell one of its three power plants to help repay debt owed to creditors that totals around $713 million, The Wall Street Journal reported. Company officials said the Chapter 11 filing would give Optim access to a $115 million bankruptcy loan from Cascade Investment LLC, the investment fund owned by Gates. Bankruptcy Judge Brendan Linehan Shannon gave the company the go ahead to begin spending those funds.
The struggling power market is the main cause of Optim’s failure, as The Wall Street Journal said electricity prices started to fall markedly after the company was founded in 2007. This made it difficult for Optim to repay the loan it borrowed to buy its plant in Texas. If the power market continues to slide, Optim might not be the only energy company to file for bankruptcy in the U.S.
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