As Part Of Reorganization Efforts After Filing Chapter 11 Bankruptcy, San Jose Based-Calpine Corp. Sells Equipment For $112 Million
Calpine Corp. announced last week that it had sold generators, turbines, and other equipment as part of its restructuring efforts under Chapter 11 bankruptcy.
The San Jose-based power company said it had made about $112 million by selling the equipment. The company has been selling different assets to reorganize itself. In September, a bankruptcy court approved the sale of Calpine’s power plant in Massachusetts for $90.2 million.
Declaring that it had $17.2 billion in debt and $26.6 billion in assets, Calpine had voluntarily filed for bankruptcy protection last December. A number of its subsidiaries also filed under Chapter 11. Calpine offers electrical services in 21 US states and 3 Canadian provinces.
Reorganizing Under Chapter 11
After a company qualifies for Chapter 11 bankruptcy, the U.S. Trustee will appoint at least one committee to represent a company’s creditors and stockholders:
· One committee that must be formed is called the "official committee of unsecured creditors." They represent all unsecured creditors, including bondholders. The "indenture trustee," often a bank hired by the company when it originally issued a bond, may sit on the committee.
· An additional official committee may sometimes be appointed to represent stockholders.
· The U.S. Trustee may appoint another committee to represent a distinct class of creditors, such as secured creditors, employees or subordinated bondholders.
After the committees work with the company to develop the plan, the bankruptcy court must find that it legally complies with the Bankruptcy Code before the plan can be implemented. This process is known as plan confirmation and is usually completed in a few months.
Before plan confirmation however, the debtor has 120 days to submit a plan to the courts. This plan needs to include the different classes that each creditor falls under and show how the payments of debt will be made. Usually, all classes have to accept the plan by a majority vote in number of claims and at least 2/3 in dollar value, within each class. The bankruptcy court has to approve the reorganization plan. If each class of creditors does not approve the plan, the bankruptcy court can still approve the plan if it feels that it is in the creditors best interests.
Sagaria Law, P.C. handles bankruptcy cases in Santa Clara County, Monterey County, and Alameda County. Contact Sagaria Law, P.C. for a free consultation or if you would like to file under Chapter 7, Chapter 11, or Chapter 13 bankruptcy.
Calpine Sells Equipment For $112M, San Jose Business Journals, November 20, 2006
Calpine Files For Bankruptcy Protection, USA Today, December 21, 2005
Calpine Corporation Files Chapter 11 Petitions to Facilitate Debt Restructuring, Calpine.com
U.S. Securities and Exchange Commission
Chapter 11 Reorganization, Bankruptcy Action.com
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