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Retail Supplier Files Bankruptcy Petition

February 15, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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BBPC, LLC d/b/a Great Eastern Energy, along with GEEnergy Holding Co. LLC (Debtors), have filed voluntary petitions for bankruptcy under Chapter 11

The filing follows BBPC, LLC being in default at the New York ISO, which had been exclusively reported by earlier this week

As of January 31, 2019, BBPC’s existing book of customers was comprised of approximately 49,000 commercial customers and 5,000 residential customers across its four state footprint. As of the bankruptcy petition date, the Debtors provided natural gas service to customers in New York, Massachusetts, and New Jersey. The Debtors also provided electricity service to customers in New York, Massachusetts, New Jersey, and Connecticut.

The Debtors sought a motion to continue to pay ISO and utility charges during the Ch. 11 proceeding

"Based on historical data, the Debtors estimate that the aggregate amount due to the Distribution Providers as of the Commencement Date will be approximately $8.2 million," Debtors said

"If the ISOs are not paid prepetition amounts that they are owed, they may terminate the Debtors ability to continue to purchase electricity in that state or region. If the Debtors are unable to procure electricity, then they will be unable to provide the customers with their electricity needs. In that circumstance, the customers will revert to their default energy provider, and the Debtors will lose all of their customers in that area to the default energy provider for that area," the Debtors said

The Debtors listed "Events Leading to Chapter 11" as follows:

The competitive retail electric power industry is characterized by high degrees of both fragmentation, competition, and customer attrition because power providers compete primarily on price and have little else available to differentiate their products and services. Particularly in years with high volatility in weather and energy prices, customers paying high electricity and gas bills will tend to seek out other competitive retail electric providers, resulting in higher attrition rates. Also, larger independent retail energy providers have been active in acquiring customer books of their competitors.

Small consumers are also becoming more and more sophisticated in shopping for electric and gas service. In selecting the lowest cost, some residential consumers may choose a pricing plan that changes every month in order to get the lowest near-term price. Others pay an appropriate premium because they prefer to lock in a price for a period of a year or longer. In some instances, there is no premium because the retail energy provider is interested in the long-term customer relationship. “Low cost” is a determination that is made by each consumer, because individuals know how they want to manage their time and resources.

Small consumers are also using energy-efficient appliances and devices, adopting green building technologies, and taking other actions that help protect the environment, but also lower demand for energy products

All of these factors converged to decrease the Debtors’ revenue and cause them to default on certain of their obligations.

The Debtors also disclosed that: "Over the several months prior to the Petition Date, the Debtors sought to secure a replacement of the indebtedness to Macquarie and Macquarie Energy or locate a third party interested in acquiring all or parts of the Debtors’ business. While the Debtors were working with two interested parties, and notwithstanding the Debtors efforts to seek to locate either a party to provide equity infusion to offset amounts owed to the Prepetition Secured Creditors or to locate a purchaser for some or all of the assets of BBPC, the Debtors were unable to consummate a transaction in the timeframe dictated by the circumstances they faced."

In a motion, the Debtors said that, prior to filing the petition, BBPC and GEE Holding were in default under a Prepetition Credit Agreement with Macquarie Investments US Inc., as well as an ISDA Agreement, which led to a series of seven (7) Forbearance Agreements (collectively, the “Forbearance Agreement”), the latest of which was dated as of January 31, 2019.

According to the petition, on February 7, 2019, the Prepetition Secured Creditors notified BBPC (i) that the term of the Prepetition Credit Agreement had expired in accordance with its terms, (ii) that the forbearance period set forth under the Forbearance Agreement had terminated in accordance with the terms of the Forbearance Agreement, and (iii) of the existence of certain defaults under the ISDA Agreement and as a result of the existence of such defaults, Macquarie Energy had designated an Early Termination Date (as defined in the ISDA Agreement) under the ISDA Agreement of February 11, 2019. According to the petition, on February 12, 2019, Macquarie Energy notified BBPC of the Early Termination Amount (as defined in the ISDA Agreement) due and owing by BBPC under the ISDA Agreement in respect of the Early Termination Date (as defined in the ISDA Agreement) (which amount is subject to adjustment and correction in accordance with the terms of the ISDA Agreement)

"As a consequence of the termination of the Prepetition Credit Agreement and the ISDA Agreement, and after discussions with the Prepetition Secured Creditors regarding an agreeable path forward, the Debtors have determined in consultation with their advisors that the value of the Debtors’ estates is likely to be maximized through the filing of these Chapter 11 Cases and a prompt sale of their remaining assets. Consequently, the Debtors intend to pursue a sale of substantially all of their assets pursuant to section 363 of the Bankruptcy Code and intend to file a sale procedures and sale motion as soon as possible after the First Day Hearing," the Debtors said

The case was filed in the United States Bankruptcy Court for the District of Delaware

Case 19-10303-KJC et. al.

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