Bankrupt Texas Retail Provider Seeks Court Order To Compel Mediation With Wholesale Supplier

Pogo Energy, LLC (Debor) filed a motion in its bankruptcy proceeding seeking a court order to compel mediation with Luminant Energy Company, its credit facility provider and QSE

In the motion, Pogo said, "Because the Debtor acquires all of its electricity through Luminant, the Debtor was eventually faced with an invoice to Luminant in the amount of $26 million for the Storm Uri days that it was unable to pay from its operating revenue. This unpaid invoice to Luminant was the primary basis for the Debtor seeking relief in chapter 11, and a settlement with Luminant would likewise form the basis of the Debtor’s path out of bankruptcy."

In the motion, Pogo said, "Recognizing the critical nature of reaching an agreement with Luminant in order to resolve Luminant’s claim and establish a path to emerge from chapter 11, the Debtor has sought to engage in settlement negotiations with Luminant since the time it filed its petition. In that time, the Debtor and Luminant have made a number of good-faith attempts to resolve the dispute between them, including (1) a full-day settlement conference in Dallas on July 20, 2021, (2) the exchange of several term sheet proposals, and (3) ongoing discussions between the business leaders on both sides. Unfortunately, the parties have been unable to finalize an agreement, and at this point in the proceedings, the Debtor believes that the involvement of a neutral third-party mediator is necessary to reach an agreement, which will be in the best interests of the estate and its creditors."

"By this Motion, the Debtor seeks entry of an order, substantially in the form attached hereto, pursuant to section 105(a) of the Bankruptcy Code and Local Rule 9019-2 directing the Debtor and Luminant to participate in mediation. The Debtor acknowledges that there is no practical way for the it to successfully emerge from chapter 11 bankruptcy absent and agreement with Luminant, and is of the belief that mediation will provide the most efficient path to such an agreement," Pogo said