CoServ Electric

The Situation

CoServ Electric is an electric cooperative in North Texas that supplied electric service to rural communities for over 35 years.   As Dallas/Ft Worth Metroplex grew, the expanding community expanded into the CoServ area.   CoServ expanded into new services in the 1990’s by providing capital to developers, in essence CoServ dug one “trench” and provided electric, gas, and telcom services and the developers had ready available financing. The secured lender to Coserv began to tighten the line of credit and by the time the funding ceased at the end of 2001, CoServ had amassed over $1 billion of debt on an electric utility that was only producing about $150 million of revenue, and additional telcom and gas only generating approximately $30 million of volume.   The additional telcom and gas utilities were far from being completed and the inability to raise new capital for the build out of the utility infrastructure precipitated a bankruptcy filing.


Bankruptcy Fiduciary

  • Court Appointed Examiner

The Work

We were initially engaged to review the representation   of various constituency in the case and insure there were no conflicts and to be sure all constituencies were represented.  Additionally, there were inter-company transactions and the validity of those transactions had to be reviewed.   The examiner was also asked to assist in the negotiations of 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 the entities.
  • The secured creditors did far better than in the originally contemplated liquidation.
  • The reorganization resulted in a 100% distribution to the unsecured creditors of two estates.
  • It also resulted in an estimated 80% return for the third estate.
  • The Debtors reorganized with better balance sheets and continued to operate going forward.

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Engagement Team