Judge Extends Shield of U.S. Bankruptcy Law to Spain’s Abengoa
Spanish renewable energy company trying to secure creditors’ support for restructuring
A federal judge agreed to extend the shield of U.S. bankruptcy law to Abengoa SA while the Spanish renewable energy company works to secure creditors’ support for a restructuring plan.
Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., on Thursday agreed to preliminarily shield Abengoa SA and a host of affiliates from any creditor actions in the U.S., extending a protection that Abengoa has already secured from a Spanish court.
Abengoa this week sought protection under chapter 15 of the U.S. bankruptcy code, which is available to foreign companies, after 75% of its financial creditors signed on to a standstill agreement that gives Abengoa until the end of October to reach a comprehensive restructuring agreement without the threat of its creditors interfering with those efforts.
“That leaves an unknown 25% out there that we’re not sure what they’re doing or what they’re thinking,” Abengoa lawyer Craig Martin said at Thursday’s hearing.
The extra breathing room afforded by the chapter 15 filing will make sure that any creditors that didn’t sign the standstill agreement can’t turn to the U.S. courts to collect on their debts, Mr. Martin added.
Court papers show Abengoa’s debt load tops €14.6 billion ($16.6 billion). Abengoa, which operates around the world, is hoping in its restructuring to cut costs, shed noncore assets and emerge as a slimmer business valued at €5.395 billion with €4.9 billion in debt.
Creditors that have preliminarily pledged their support for the restructuring include banks like Banco Popular, Banco Santander and Bankia, as well as bondholders like Centerbridge Partners, D.E. Shaw, Elliott Management and KKR & Co.
In connection with the global restructuring, Abengoa also this week put a number of its U.S. units into chapter 11 protection in Delaware. Abengoa lawyer Richard Chesley said more U.S. affiliates may file for bankruptcy later as restructuring talks continue.
Also at Thursday’s hearing, the U.S. units made their initial appearance before Judge Carey, who signed off on a number of requests to keep the companies operating normally following their chapter 11 filings.
This week’s filings are separate from a pending chapter 11 proceeding for other Abengoa U.S. affiliates that was filed in a St. Louis bankruptcy court in February. Those affiliates, which operate ethanol plants in the Midwest, are exploring a sale or stand-alone restructuring. Mr. Chesley said Thursday that those companies are not part of Abengoa SA’s go-forward business plan.