Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Moody's: Energy Future Holdings in Danger of Bankruptcy
Author: Joel R. Glucksman
Date: September 24, 2013
Key Contacts
Back
Energy Future Holdings Corp. is facing a “high probability” of being forced to seek protection due to the danger of bankruptcy, according to a recent report from credit ratings agency Moody’s Investors Service.
The ratings agency said that the energy giant will likely seek bankruptcy protection and establish a reorganization plan by the end of the year, which would make it one of the top 10 largest non-financial corporate bankruptcies in the U.S. since the 1980s. In fact, the company is carrying one of the largest debt loads in recent history, ranking up there with Enron, WorldCom, General Motors, and Chrysler. In total, Energy Future Holdings is currently saddled with more than $41 billion in debt.
The company was purchased in a $45 billion leveraged buy-out in 2007 by a group of Wall Street companies that included Goldman Sachs, KKR, and TPG Capital. The investors appear to have hoped that the debt they took on to buy the company would be managed by a projected spike in natural gas prices. However, this backfired when the price of natural gas plummeted to record-low levels, leaving the group burdened with debt.
The electric utility company’s assets include a power generation portfolio composed of nuclear energy and coal-fired power provided by Luminant, a power transmission business provided through Oncor Electric Delivery, and a retail power provider extended through TXU Energy.
Should the Texas-based company seek bankruptcy protection, electricity customers are not expected to experience significant service disruptions.
“Our expectation is that there should be no material impact on the grid,” said Moody’s analyst Jim Hempstead, according to Fuel Fix. “We have never seen a bankruptcy that has turned the lights off. All of the Luminant assets are going to get scrutinized as to what is economical and what is not – there may be a plant or two that is shut down or mothballed or otherwise taken out of the stack.”
According to sources, should the company seek out bankruptcy protection, investors can expect to secure roughly 50 percent ultimate recovery on debt from subsidiaries. This amount would be among the lowest recovery from unregulated power companies, according to Electric, Light and Power.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
Author: Marc J. Comer
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
Author: Wendy Rubinstein Quiroga
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Author: Sean M. Pena
Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders
Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability. For developers, battery storage presents […]
Author: Nicholas Wall
Navigating Disputes: Hire a Partnership Dispute Lawyer
A falling out between partners can be disastrous for any business. In many cases, the partnership will not survive. If you are in an unworkable situation with your partners, it may be time to consult a partnership dispute lawyer experienced in handling partnership breakups and dissolutions before the situation deteriorates any further. It is easy […]
Author: Jay McDaniel
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Author: John D. Giampolo
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.