Retail Supplier Alleges Movement By Utility Regulator's Staff To Revoke Supplier's License Represents "Direct And Willful Violation" Of Stay Provided Under Bankruptcy Protection
July 1, 2021 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Liberty Power Holdings LLC ('LPH') filed a response with the Connecticut PURA opposing a motion from PURA's Office of Education, Outreach, and Enforcement ('EOE') in which EOE sought the re-opening of LPH's licensing docket for the purpose of considering the revocation of LPH's license, with LPH alleging that EOE's action represents, "direct and willful violation" of a stay granted in LPH's bankruptcy proceeding
In its response, LPH stated, "LPH is concerned that EOE’s proposed filing includes a Proposed Draft Decision based on incorrect information with no evidence in the record and is further concerned that PURA would draw on the LPH bond or EOE would seek a revocation of LPH’s license when LPH has met the payment obligations referenced in the Motion and has committed to continue to meet its obligations going forward."
In its response, LPH stated, "First and foremost, the EOE appears to misunderstand the bankruptcy. LPH has filed a Chapter 11 bankruptcy proceeding, which provides for the continued operation and reorganization of LPH under the protection of the Bankruptcy Court. LPH did not file a Chapter 7 petition, has not ceased operations and has not turned over control of its assets and/or operations to a Chapter 7 trustee. A Chapter 11 bankruptcy gives LPH the opportunity and breathing room to reorganize its financial affairs and, in the case of LPH, market and sell substantially all of its assets as a going concern to a qualified buyer."
In its response, LPH stated, "Importantly, through filing the Chapter 11 bankruptcy, LPH has the benefit of the automatic stay provisions of Section 362(a) of the Bankruptcy Code. The automatic stay is self-effectuating and prevents any person or entity (even a government entity) from, among other things, (i) taking action to commence or continue an judicial, administrative or other action or proceeding against LPH that could have been commenced before the bankruptcy filing, (ii) to recover a claim against LPH, and/or (iii) taking any action to exercise control over property of the estate. To be clear, LPH believes and asserts that the Motion and the Proposed Draft Decision are direct and willful violation of the automatic stay. For that reasons [sic], LPH objects to EOE proceeding with either effort."
In its response, LPH stated, "Moreover and separate from the above, EOE equates the bankruptcy filing with the inability of LPH to meet its continuing obligations, which position is simply untrue. As LPH stated in its May 5, 2021 letter, which EOE did not acknowledge, LPH has adequate cash on hand and has met all of its financial obligations to Connecticut. Since commencing the Reorganization, LPH has secured a commitment for debtor-in-possession ('DIP') financing in the amount of $40 million. This financing, which was approved by the Bankruptcy Court on a final basis on May 27, 2021, supplements LPH’s cash presently on hand and the cash expected to be generated from its ongoing operations. The net result will be an even firmer financial position for LPH than before the Texas event. The DIP financing process also requires that LPH commence and implement a sale process to maximize value, which is expected to conclude in August 2021. In the meantime, however, LPH will continue to provide its competitive products, services, and pricing and honor its customary commitments to vendors and suppliers for goods and services rendered on or after the Reorganization commencement date."
Regarding a specific tax issue, LPH stated, "Tax payments are due at the end of the month after which they are issued. In other words, statements issued in March are due by the end of April. In LPH’s case its March 2021 payment was due by April 30, 2021, but was paid in full by May 28, 2021. The late payment charge for this payment was paid before its June 30, 2021 due date. LPH’s April and May 2021 tax payments were both made on time in May and June respectively. LPH’s payment for the June 2021 statement was made on June 28, 2021."
In its response, LPH stated, "Secondly, there appears to be a serious misunderstanding as to what happened between Liberty Power Corp. and LPH. Liberty Power Corp. is the parent company and legal entity for which the employees previously worked. LPH is the legal entity licensed in Connecticut to serve customers. On April 15, 2021, LPH’s largest secured creditor, Boston Energy Trading and Marketing ('BETM') exercised step in rights for LPH. It was subsequent to that action that the CEO of Liberty Power Corp., who no longer had control over LPH, made the decision on April 18, 2021 to terminate the employees of Liberty Power Corp. This had no impact on operations. LPH still had people and vendors who were taking calls and addressing customer needs while LPH worked to hire Liberty Power Corp employees back. As indicated in the May 5, 2021 letter, most of these employees were immediately re-hired by LPH the same week. Bob Butler was appointed as the Chief Restructuring Officer of LPH, and the former CEO of Liberty Power Corp. no longer has control or any influence over LPH’s operations. LPH has retained the Chief Financial Officer, Chief Legal Officer, Chief Operations Officer, Chief Risk Officer, and Chief People Officer, as well as approximately 75 of its pre-petition 95 employees. LPH has been operating efficiently and effectively over the last two months and will continue to do so."
In its response, LPH stated, "The EOE also seeks to draw on the $250,000 bond that LPH filed with PURA despite the fact that they claim that LPH has an unpaid balance of $123,805.69. It is inappropriate for EOE to draw on a $250,000 for an obligation that is less than half of that. Nevertheless, it is even more inappropriate for EOE to draw on the bond considering that LPH has satisfied its obligations and intends to do so post-petition."
In its response, LPH stated, "The Proposed Draft Decision recommended by EOE provides that '[b]ased on [LPH]’s failure to fulfill its licensing obligations . . . the Authority hereby reopens the February 16, 2007 Decision in this docket to consider the revocation of [LPH]’s electric supplier license' and also states that LPH 'has not proven it has cured the violation upon being informed of it and being provided the opportunity to cure.' LPH has met its obligations in Connecticut. LPH has employees to serve customers. LPH continues to meet all of its post-petition payment obligations and continues to operate with dedicated staff and a new focus on customer service. Moreover, any such action is a direct and willful violation of the automatic stay provisions of the Bankruptcy Code. Therefore, LPH strongly opposes the EOE’s Motion and Proposed Draft Reopening Decision. LPH does remain willing to discuss any future concerns that EOE may have."