CoServ Electric

CoServ Electric

Roles
Examiner
  • Secured creditors recovery greater than originally contemplated liquidation
  • Debtors reorganized with better balance sheets and continued to operate

The company was an electric cooperative in North Texas that supplied electric services to rural communities. The company had $1B+ of debt on a $150MM service product with additional services generating approximately $30MM; other incomplete service lines resulted in the inability to raise new capital for build-out of utility infrastructure which precipitated a bankruptcy filing. A CR3 professional was appointed as Examiner of the estate and assisted in negotiations with the parties. Plans of Reorganization were filed by entities – the reorganization resulted in 100% distribution to unsecured creditors of two estates and an estimated 80% return for the third estate. The resulting secured creditors recovery was greater than the originally contemplated liquidation and the debtors reorganized with better balance sheets and continued to operate.

The Situation

  • Electric cooperative in North Texas that supplied electric service to rural communities for over 35 years; growing community in Dallas/Ft. Worth metro area expanded company’s customer base, leading to offering of new services with developer provided capital
  • Secured lender tightened line of credit; when funding ceased company had $1B+ of debt on an $150MM service product with additional services generating approximately $30MM; other incomplete service lines resulted in inability to raise new capital for build out of utility infrastructure which precipitated a bankruptcy filing

The Work

  • CR3 professional was appointed as Examiner of the estate
  • Engaged to review representation of various constituencies in the case and ensure no conflicts and all constituencies were represented
  • Reviewed inter-company transactions and validity
  • Examiner was asked to assist in negotiations with the parties
  • A separate committee was appointed for a subsidiary to avoid conflicts and several debtor and non-debtor transactions were altered to avoid any conflicts

The Results

  • Plans of Reorganization were filed by entities - reorganization resulted in 100% distribution to unsecured creditors of two estates and an estimated 80% return for third estate
  • Secured creditors recovery greater than originally contemplated liquidation
  • Debtors reorganized with better balance sheets and continued to operate

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