The more-than-year-long, often contentious bankruptcy of FirstEnergy Solutions Inc. is in the endgame.
If U.S. Bankruptcy Court Judge Alan M. Koschik in Akron gives his approval following a hearing Tuesday, the unregulated generation arm of Akron-based electric utility FirstEnergy Corp. will emerge from Chapter 11 proceedings spun off as an independent company and likely change its name before the end of the year.
The judge is scheduled to hold a confirmation hearing starting 10 a.m. Tuesday in the Seiberling Federal Building on South Main Street. The hearing is to confirm whether all required bankruptcy code elements have been met by FirstEnergy Solutions, also called FES. There’s a possibility the hearing could spill over into Wednesday.
Signs point toward confirmation. A majority of creditors earlier this month approved the reorganization plan, with the results ratified Aug. 12, according to court filings.
FES will make its case for confirmation to Koschik, including saying that all objections should be overruled and the plan should be imposed on creditors who rejected the reorganization.
Objecting parties will also be able to present their cases Tuesday. Friday was the deadline for objections and responses to be filed on the confirmation plan ahead of Tuesday’s hearing.
If the judge approves the plan, he is expected to issue a confirmation order within a few weeks of the hearing. FES then will start working on exiting bankruptcy by the end of the year. Regulators also need to approve the FES reorganization.
Koschik, who earlier this year shot down the initial FES reorganization proposal, approved a revised plan in May. That in turn allowed creditors to vote on the revised plan by Aug. 2.
Environmental groups and federal and state government entities filed documents last week stipulating that FES had resolved their objections.
The stipulations say, among other things, that should a reorganized FES demolish Ashtabula and W.H. Sammis power plants, it will fully cleanup and restore those sites and other properties. If properties are sold, the buyers also are obligated by the clean-up and restoration stipulations.
FES filed for Chapter 11 bankruptcy on March 31, 2018, meaning it was seeking to reorganize, not liquidate.
The FES bankruptcy and upcoming spinoff are part of FirstEnergy Corp.’s plan to return to being a fully regulated electric utility.
FES intends to keep its headquarters in Akron once it exits from bankruptcy, its senior executives have previously said.
The complex FES bankruptcy also touched on the future of coal and nuclear plants in Ohio and other states where it makes electricity.
Earlier this summer, Ohio approved bipartisan-supported legislation that will give the power generation company as much as $150 million a year from ratepayers to keep open its two Ohio nuclear power plants, Davis-Besse and Perry. A petition drive was started to overturn the law following its passage.
The law imposes a fee of 85 cents a month on residential ratepayers starting in 2021. Ratepayer money also will help shore up two coal plants owned by a group of power companies as well, with other money going to solar projects in the state.
FES had announced it would shut down the two nuclear plants along the Lake Erie shoreline if the plants didn’t get financial support. Proponents said the legislation saves as many as 1,400 jobs and will help ensure the creation of carbon-free electricity from plants. Critics, including environmental groups and the oil-and-gas industry have called it a bailout. The additional ratepayer money is subject to annual review.
FES also came under criticism this month from a labor union that said the company was seeking to dump a union contract at its Perry nuclear plant. FES calls the complaint unfounded and says that it continues to negotiate a new union contract at Perry similar to other labor agreements it has reached.
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