By Peg Brickley
A bankruptcy judge on Tuesday dealt a blow to NextEra Energy Inc.'s campaign to collect a $275 million breakup fee for its failed attempt to take over Energy Future Holdings Corp.'s Oncor power-transmission business.
Judge Christopher Sontchi said he made an error last year when he approved the breakup fee in a deal Energy Future hoped would bail it out of bankruptcy. Reconsideration of the breakup fee order is appropriate, the judge said.
Tuesday's ruling is a win for creditors of Energy Future, which are now counting on a new deal -- the sale of Oncor to Sempra Energy, for $9.45 billion. That isn't enough money to pay off all the debts remaining in Energy Future's bankruptcy case, which began in 2014.
NextEra's claim to a $275 million breakup fee, had it succeeded, would have put a big dent in the pile of money Energy Future is expecting from the Sempra deal, leaving some creditors with a depleted recovery. Judge Sontchi's ruling that the breakup fee was approved based on an erroneous understanding casts serious doubt on whether NextEra will be able to collect.
The product of years of effort, NextEra's takeover attempt was rejected by the Public Utility Commission of Texas in a surprise ruling this year. Regulators said NextEra's buyout of Oncor, a power-transmission business that is a vital piece of the Texas power system, wasn't in the public interest.
Defeated in the deal, NextEra claimed it was entitled to collect the breakup fee from Energy Future, to cushion the blow of a takeover campaign that cost tens of millions of dollars.
The decision came in a fight led by Elliott Management Corp., a hedge fund that picked up big stakes in Energy Future debt earlier this year. Elliott has been leading creditors in an effort to spur aggressive action by Energy Future to defeat the breakup fee.
Write to Peg Brickley at [email protected]