Forward Motions: Energy Future Seeks to Pay Bankruptcy Bonuses

Energy Future Holdings Corp. will continue making its case next Wednesday in Wilmington, Del., to pay as much as $18 million in bonuses to upper management. A hearing on the matter began on Oct. 8 and spilled into Oct. 9, as the company faces a fight from U.S. Trustee Roberta A. DeAngelis.

Among Ms. DeAngelis’s problems with the package is a pre-existing bonus arrangement that could nearly double the amount Energy Future is seeking.

Energy Future’s lawyers say the existing bonus package, $18 million worth of letters of credit backing payments to five top executives, has been disclosed in the company’s regulatory filings. The company has been putting on witnesses trying to prove the incentives tied to the bonuses are tied to difficult-enough milestones. Executives and other top employees aren’t allowed to be paid retention bonuses in bankruptcy cases, but incentive bonuses are acceptable. Ms. DeAngelis has argued the milestones tied to bonuses are too easy. The dust-up over bonuses comes as the company prepares to auction one of its most valuable assets, an 80% stake in the transmission business Oncor. Energy Future sought Chapter 11 bankruptcy protection in April, with $42 billion in debt on its balance sheet.

LightSquared

LightSquared is scheduled to update a judge on its restructuring on Wednesday in Manhattan.

Last week, Judge Shelley C. Chapman told the wireless venture’s lawyers that she is considering converting the case to a Chapter 7 liquidation if parties can’t come together on a restructuring.

Multiple reorganization plans have been presented for the company, including one backed by a group of hedge funds holding bank debt. That plan would pay those investors and give them control of LightSquared, which is controlled by Philip Falcone through his Harbinger Capital Partners hedge fund firm but won’t be if and when it comes out of bankruptcy.

Dish Network Corp. Chairman Charlie Ergen, LightSquared’s largest creditor, would get a $1.1 billion allowed claim in the case if he chooses to vote for the latest plan. Other proposals have also been made, including one made by Harbinger for the smaller piece of LightSquared, dubbed the “Inc.” assets.

LightSquared filed for Chapter 11 in May 2012 after federal regulators refused to clear its plans to launch its wireless network, which they said could interfere with global-positioning systems.

Since then, the company and its creditors have fought through many fits and starts to come up with a restructuring proposal that pleases everyone while adhering to the law.

NII Holdings

On Tuesday in Manhattan, Judge Chapman will oversee NII Holdings Inc.’s so-called second day bankruptcy court hearing and first case status conference since the formation of its official committee of unsecured creditors.

That committee includes Mark Brodsky’s Aurelius Capital Management, which leads a creditor group that had proposed a restructuring plan for the Latin American Nextel carrier.

On the agenda for Tuesday are final approvals of NII’s first-day motions, including the right to keep paying employees.

NII filed for Chapter 11 last month, the result of skipping a $118.8 million interest payment. NII tried to negotiate with bondholders to stay out of bankruptcy, but couldn’t.

Reston, Va.-based NII provides mobile communications services in Latin America, operating under the Nextel brand in Brazil, Mexico, Argentina and Chile. The company said the loss of customers has hurt the company in recent years, as has currency depreciation in the countries where it operates.

NII put four more of its subsidiaries into bankruptcy on Oct. 8.

-Stephanie Gleason and Peg Brickley contributed to this article.

 Write to Joseph Checkler at [email protected].