Retail Supplier Says "Injunction" Prevents Regulator From Proceeding With Notice Of Violation Which Seeks To Return Supplier's Customers To Default Service, Suspend License

Liberty Power Holdings, LLC ("Liberty", "Company", or "Debtor") filed a motion at the Connecticut PURA arguing that a recent bankruptcy court sale order approving the sale of certain of its customers to NRG Energy (including residential customers) prohibits the Connecticut PURA from continuing with a Notice of Violation (NOV) proceeding against Liberty, with such NOV proceedings seeking to return Liberty's customers to default service and suspend Liberty's license

See background on the sale of part of Liberty's customer book to NRG here

See background on the NOV here

Liberty termed the bankruptcy court's action an "injunction", due to certain ordering paragraphs and prohibitions included in the bankruptcy court's Sept. 15 sale order. PURA, in issuing the NOV, previously dismissed arguments from Liberty that PURA's action is prohibited by the automatic stay provisions of federal bankruptcy proceedings (see discussion here)

Specifically, Liberty said that the bankruptcy court sale order provides that, "Subject to the terms, conditions, and provisions of this Sale Order, all Persons are hereby forever prohibited and barred from taking any action that would adversely affect or interfere (a) with the ability of the Debtors to sell and transfer the Purchased Assets to Buyer in accordance with the terms of the Asset Purchase Agreement and this Sale Order, and (b) with the ability of the Buyer to acquire, take possession of, use and operate the Purchased Assets in accordance with the terms of the Asset Purchase Agreement and this Sale Order."

The bankruptcy court sale order further provides that, "Nothing in this Sale Order or the Asset Purchase Agreement releases, nullifies, precludes or enjoins the enforcement of any police or regulatory liability to a governmental unit that any Person would be subject to as the post-Closing owner or operator of the Purchased Assets after the date of entry of this Sale Order, including without limitation the applicable public utilities commissions; provided, however, that: (i) the foregoing shall not limit, diminish or otherwise alter the Debtors’ or the Buyer’s defenses, claims, causes of action, or other rights under any applicable law with respect to any liability claimed by any Governmental Entity and (ii) Governmental Entities are hereby prohibited from attempting or seeking to rescind, terminate or otherwise cause the cancellation of any Assigned Contracts, and from asserting or seeking to collect any fines, fees or other monetary awards against the Buyer or its affiliated designees, in each case that are based in whole or in part upon any act, omission or event occurring prior to the applicable Closing."

Liberty said that, "The Company is one of the Debtors (as defined in the Sale Order), and the Company’s Connecticut customers contracts are among the Purchased Assets (as defined in the Asset Purchase Agreement). These Proceedings, if continued in violation of the Sale Order, would adversely affect and interfere with the Company’s ability to sell and transfer these contracts because these Proceedings seek to return all of the Company’s customers to Standard Service, which would result in no Connecticut contracts being available for transfer in direct contravention of the Sale Order. These Proceedings also seek the revocation or suspension of the Company’s electric supplier license, and such revocation or suspension would have the effect cancelling these contracts."

Liberty moved for PURA to dismiss the NOV and dismiss the proceedings.

Docket No. 06-12-07RE09