U.S. Bankruptcy Court on Monday approved milestone filings from FirstEnergy Solutions Inc., moving the Akron company significantly closer to receiving approval for its Chapter 11 bankruptcy reorganization.
Monday’s rulings mean the FirstEnergy Solutions reorganization plan can be put to a vote by the company’s creditors this summer.
Then, if creditors approve, the plan goes back to bankruptcy court in August for the judge’s formal ruling, which could lead to the company legally separating from FirstEnergy Corp. and striking out as an independent electric generation business — likely with a new name. Any approved plan will also need regulatory approvals.
Bankruptcy Court Judge Alan Koschik approved FirstEnergy Solutions' amended disclosure statement, a 217-page document that spells out the company’s reorganization plan, during a hearing in the Seiberling federal building in downtown Akron. He also approved other related filings.
This was the fifth disclosure document filed with the court since FirstEnergy Solutions filed for Chapter 11 bankruptcy protection on March 31, 2018.
Attorney Brad Kahn, representing FirstEnergy Solutions, told the judge that the latest document resolved objections raised by other parties in the case.
Koschik in early April told FirstEnergy Solutions the reorganization plan needed to be revised. The judge said the plan as filed then was “patently unconfirmable."
Federal and state agencies and environmental groups had also heavily criticized previous reorganization plans.
Those criticisms were absent Monday.
The newly approved plan eliminates what are called “nonconsensual third-party releases” that FirstEnergy Solutions had been seeking.
Environmental groups have been worried that FirstEnergy Corp. was using the FirstEnergy Solutions bankruptcy to rid itself of responsibility for any potential environmental issues at power plants that would be owned by an independent FirstEnergy Solutions.
Following the end of Monday’s hearing, many of the attorneys who populated much of the second-floor courtroom shook hands.
Among the attendees was Margrethe Kearney, senior attorney with the Michigan-based Environmental Law & Policy Center, which represents citizen groups monitoring the bankruptcy process.
Kearney said she and her clients still wonder whether a newly independent FirstEnergy Solutions has sufficient funds to successfully shut down the company’s nuclear power plants and clean up and monitor the sites for a 60-year period.
“We still have concerns about whether there is enough money,” Kearney said.
FirstEnergy Solutions intends to emerge from Chapter 11 as an independent power producer with coal and nuclear power plants.
The process is part of a plan by FirstEnergy Corp. to become a fully regulated electric utility. FirstEnergy Solutions technically remains the unregulated generation arm of FirstEnergy during the bankruptcy process.
Jim Mackinnon covers business. He can be reached at 330-996-3544 or email@example.com. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.