Agera Energy, LLC
CASE SUMMARY: Retail Energy Supplier Agera Enters Into RSA Term Sheet With 1L Lender BP Energy, Agrees to Sell Assets to Exelon Sub Constellation as Stalking Horse
Fri 10/04/2019 14:41 PM
Relevant Documents:
Voluntary Petition
Press Release
First Day Declaration
Bid Procedures Motion
Motion to Assume RSA Term Sheet
Cash Collateral/Supply Facility
First Day Hearing Agenda
Agera Energy, a Briarcliff Manor, N.Y.-based retail electricity and natural gas supplier for commercial, industrial and residential customers, filed for chapter 11 protection today in the Bankruptcy Court for the Southern District of New York, along with several affiliates. The company entered into a restructuring support agreement term sheet with first lien lender BP Energy, which provides for the sale of a “significant portion” of its customer contracts to Constellation, a subsidiary of Exelon Corporation through a $24.75 million stalking horse bid, followed by a chapter 11 plan of liquidation.
The debtors have been implementing a wind-down plan (a copy of which is attached to the RSA term sheet assumption motion) since “at least” August, in consultation with BP, and say that they expect to stop servicing all customers by the end of the year.
The first day hearing is scheduled for today, Oct. 4, at 3 p.m. ET.
The company reports $124.2 million in assets and $207.8 million in liabilities as of July 31. As described in the first day declaration of COO Todd Sandford, the debtors’ prepetition capital structure includes:
The company was formed by Platinum Partners to purchase the assets of bankrupt Glacial Energy Holdings. Equity owner Greg E. Lindberg was indicted earlier this year for “acts that are wholly unrelated to the Debtors,” according to COO Sandford, who states that Lindberg has no involvement in the debtors’ day-to-day operations. After Lindberg was indicted, the debtors’ management team was replaced and “a number of structural challenges” were uncovered, including poor financial planning and forecasting, suboptimal pricing and risk management and an overstated balance sheet.
As of Aug. 31, 2018, the debtors’ financials included approximately $39 million of overstated receivables, of which $37 million related to unbilled receivables. Consequently, the debtors “suddenly” found themselves in breach of the senior lien supply agreement’s $16 million tangible net worth covenant. After further prepetition defaults, forbearance agreements, state enforcement actions and a prepetition marketing process and signing the APA with Exelon yesterday, Oct. 3, the debtors determined to seek bankruptcy protection.
The debtors are represented by McDermott Will & Emery as counsel and Stifel Nicolaus and Miller Buckfire as investment bankers. The company is also working with GlassRatner Advisory & Capital Group. Stretto is the claims agent. The case has been assigned to Judge Robert Drain (19-23802).
Background
Agera supplies electricity and natural gas to 87 distinct utility regions and provides service to approximately 35,000 customers (75% commercial and 25% residential). The debtors say that they offer their customers “energy choice” through the ability to receive electricity and natural gas from a source other than the local utility in certain markets that have been restructured to permit retail competition, “which allows customers to tailor energy supply to their specific needs.” Approximately 28 states have at least partially deregulated their utility markets. The debtors hold licenses to sell retail electricity in 15 states and retail natural gas in 12 states. The debtors have 56 employees after prepetition staff reductions.
The debtors characterize the retail energy business as, by nature, “very competitive,” with low margins. Agera grew “significantly” in the 18-month period through June 2018, the debtors explain in the filings, largely resulting from selling and onboarding customers on fixed price power contracts, which are “inherently riskier” than variable price contracts.
Upon discovery of the company’s financial issues, the management team developed, and presented in late September 2018, a number of strategic options for Eli Global to assess, ranging from a bankruptcy filing to a turnaround plan. Eli Global ultimately committed to a turnaround plan, “with full recognition of the capital necessary to fund the plan.” The debtors’ business was not expected to be profitable until 2020 given that it had to deal with the run-off of low-and negative-margin customer contracts. The debtors say they were executing the turnaround plan up until the unexpected capital liquidity problems, including the defaults and the loss of funding from Eli Global.
The debtors’ corporate organizational structure is below:
The debtors' largest unsecured creditors are listed below:
The case representatives are as follows:
Restructuring Support Agreement / Motion to Assume
The debtors seek to assume the RSA term sheet, stressing that without BP’s support, “the Debtors would likely have been forced to file these Chapter 11 Cases as a ‘free fall’ bankruptcy, resulting in additional costs, complications, and potentially significant delays, each of which would have reduced stakeholder recoveries under any restructuring plan.”
The term sheet provides for the following proposed treatment of claims and interests under a plan:
The RSA term sheet also contemplates a litigation trust, including for the distribution of proceeds from avoidance actions, with a trustee to be selected by BP, to be funded with $25,000 in cash.
The RSA term sheet provides for $700,000 for a key employee incentive plan and $1.1 million for a key employee retention plan.
The RSA term sheet provides for the following milestones:
Bid Procedures Motion
Stifel, Nicolaus & Co. and Miller Buckfire ran the debtors’ prepetition sale process, which commenced in May, through which it contacted 207 parties, consisting of 121 strategic investors and 86 financial investors, of which 39 executed confidentiality agreements and 20 were provided access to a virtual data room. The debtors say that they received “numerous” preliminary indications of interest in June, leading to the $24.75 million bid from Exelon Generation Company, LLC, which also provides for the assumption of certain liabilities, subject to certain adjustments for the loss of customer contracts not transferred.
The bulk of the assets to be sold under the stalking horse purchase agreement are the debtors’ customer contracts, which would be assumed and assigned to the stalking horse bidder. The stalking horse bidder, according to the debtors, is a “qualified competitive energy supplier in each jurisdiction in which the Sellers operate.” Through the sale, Agera’s existing customers would be transferred to Constellation.
The debtors propose an expense reimbursement up to a cap of 1% of the base price, as well as a 4% termination fee. Initial overbids must exceed the stalking horse bid plus the termination fee and expense reimbursement by $1 million.
The debtors propose the following sale timeline:
COO Sandford also submitted a declaration in support of the sale motion that is attached to the motion.
Cash Collateral/Supply Facility
The debtors seek approval of DIP financing in the form of (a) the sale of natural gas and electricity on credit from BP Energy Company to Agera Energy, LLC, Aequitas Energy Inc. and energy.me midwest llc (the Agera opco entities), which electricity would be sold in the ordinary course of the debtors’ business to their customers, (b) entry into physically and financially settled hedges with BP Energy Company to hedge the debtors’ exposure to energy price fluctuations “in connection with the customer accounts that the Debtors’ intend to sell in the In-Court Sale” and (c) BP Energy Company’s consent to the continued use of a portion of the debtors’ accounts receivable to fund operating expenses.
“Because the prepetition liens cover substantially all of the Debtors’ assets and are underwater to a significant degree, there is no possibility of securing debtor in possession financing on an unsecured or junior basis or on unencumbered assets,” the debtors stress.
The DIP financing bears interest at LIBOR plus 7.5%, and matures on the earlier of (a) the transfer of all accounts associated with the debtors’ customer contracts to the successful bidder or other third party supplier or the return of such accounts to the applicable utility or local distribution company, (b) the expiry of the “Specified Period” (as defined in the financing motion) and (c) the “Final Assignment Date” (as defined in the Stalking Horse APA).
Adequate Protection
The company proposes the following adequate protection to the prepetition secured parties: replacement liens, superpriority administrative expense claims, payment of all accrued and unpaid fees and expenses including for counsel, and payment on all prepetition obligations under the denior lien transaction documents bi-weekly beginning on Oct. 18 equal to the amount of funds remaining in the collateral accounts and deposit accounts, after giving effect to payments of certain invoices relating to postpetition supply or hedges of natural gas and power, that exceeds $10 million until Dec. 1, 2019, $8 million until Jan. 1, 2020, $6 million until Feb. 1, 2020, and $3 million throughout the remainder of the “Support Period.”
In addition, subject to entry of the final order, the debtors propose a waiver of the estates’ right to seek to surcharge the prepetition and postpetition collateral pursuant to Bankruptcy Code section 506(c) and the “equities of the case” exception under section 552(b).
The carveout for professional fees is $100,000 for the debtors and any official creditors committee, and for Stephen S. Gray or Gray & Company, $50,000 pre-carve out trigger date and $50,000 post-carve out trigger date. Stephen S. Gray was appointed as the sole manager of certain of the debtors and as the sole director of Aequitas. Gray has no prior or current relationship with Eli Global or Lindberg.
DIP Milestones
The DIP financing is subject to the following milestones:
The lien challenge deadline is 75 days after entry of the interim order for any party in interest other than an official creditors committee, which would have 60 days from formation.
The proposed budget is HERE (and can be found attached to the motion to assume the RSA term sheet).
Motion to Impose the Automatic Stay
Prior to the petition date, governmental units in Massachusetts, Rhode Island and New Hampshire have taken acts against the debtors with respect to the debtors’ failure to satisfy their 2018 renewable portfolio standard, or RPS, obligations or alternative compliance payment, or ACP, obligations.
According to the motion, the Massachusetts Department of Energy Resources has recommended to the Massachusetts Department of Public Utilities that it revoke or suspend the retail supplier licenses of Agera Energy. The Rhode Island Division of Public Utilities and Carriers has issued Agera Energy a suspension order, under which Agera is prohibited from entering into new contracts or renewing existing contracts with customers in Rhode Island. The state is scheduled to conduct a public hearing on Oct. 22, 2019, to consider whether Agera’s license to sell energy in Rhode Island should be rescinded. The New Hampshire Public Utilities Commission sent Agera Energy a demand letter on Sept. 17, 2019, requesting that Agera satisfy its ACP liability for 2018 within ten days or it may pursue further action, including referral of the unpaid amount for collection to the New Hampshire Department of Justice.
The debtors say that they “may soon be in default” of their RPS obligations in other states and believe that “a specific order from this Court will help to protect the Debtors from improper actions, particularly from the governmental units that granted the Debtors their licenses, who may not be familiar with the Bankruptcy Code or its protections and who might unwittingly otherwise violate those sections.”
The debtors estimate that their inability to satisfy RPS obligations in the normal course has resulted in an aggregate ACP “premium” of approximately 60%, as compared to the cost of acquiring the renewable energy certificates, or RECs, necessary to avoid ACP obligations. As of the petition date, the debtors estimate that they owe more than $72 million on account of REC and ACP obligations for the 2018 compliance year.
Other Motions
The debtors also filed various standard first day motions, including the following:
Voluntary Petition
Press Release
First Day Declaration
Bid Procedures Motion
Motion to Assume RSA Term Sheet
Cash Collateral/Supply Facility
First Day Hearing Agenda
| Summary |
| Agera Energy is a retail electricity and natural gas supplier for commercial and residential customers in numerous states |
| Began implementing wind-down plan since “at least” August and expects to stop servicing all customers by end of year |
| Entered into an RSA term sheet with first lien lender BP Energy, through which debtors seek to sell “significant portion” of assets to Exelon subsidiary Constellation via a $24.75M stalking horse bid |
Agera Energy, a Briarcliff Manor, N.Y.-based retail electricity and natural gas supplier for commercial, industrial and residential customers, filed for chapter 11 protection today in the Bankruptcy Court for the Southern District of New York, along with several affiliates. The company entered into a restructuring support agreement term sheet with first lien lender BP Energy, which provides for the sale of a “significant portion” of its customer contracts to Constellation, a subsidiary of Exelon Corporation through a $24.75 million stalking horse bid, followed by a chapter 11 plan of liquidation.
The debtors have been implementing a wind-down plan (a copy of which is attached to the RSA term sheet assumption motion) since “at least” August, in consultation with BP, and say that they expect to stop servicing all customers by the end of the year.
The first day hearing is scheduled for today, Oct. 4, at 3 p.m. ET.
The company reports $124.2 million in assets and $207.8 million in liabilities as of July 31. As described in the first day declaration of COO Todd Sandford, the debtors’ prepetition capital structure includes:
- Secured debt:
- $161.6 million outstanding under first lien “Senior Lien Supply Agreement and Senior Lien ISDA Master Agreement” with BP Energy. The ISDA agreement debt comprises “energy supply liabilities, mark-to-market exposure, and collateral support obligations posted by BP on behalf of the Debtors.” The BP facilities are supported by a pledge of substantially all of Agera Energy’s assets and all of Agera Holding’s equity in Agera Energy (as well as substantially all the assets of debtor energy.me midwest llc and a guarantee by Greg E. Lindberg and another of his companies, Global Health Technology Group, LLC).
- $35 million in principal outstanding under a second lien revolving credit facility with Colorado Bankers Life Insurance Company. The second lien facility is subordinated to the BP facility.
- Unsecured debt: $82 million of general unsecured debt, “comprised primarily of trade claims, obligations related to REC and ACP obligations ... and broker commission payments.”
- Equity: Greg E. Lindberg owns 50% of the total economic interest and 89% of the total voting interest in AGH Parent. “Upon information and belief,” the debtors also say that Lindberg is the beneficial holder of equity interests in approximately 100 independent operating companies, including the debtors, through Lindberg-owned Eli Global LLC.
As of Aug. 31, 2018, the debtors’ financials included approximately $39 million of overstated receivables, of which $37 million related to unbilled receivables. Consequently, the debtors “suddenly” found themselves in breach of the senior lien supply agreement’s $16 million tangible net worth covenant. After further prepetition defaults, forbearance agreements, state enforcement actions and a prepetition marketing process and signing the APA with Exelon yesterday, Oct. 3, the debtors determined to seek bankruptcy protection.
The debtors are represented by McDermott Will & Emery as counsel and Stifel Nicolaus and Miller Buckfire as investment bankers. The company is also working with GlassRatner Advisory & Capital Group. Stretto is the claims agent. The case has been assigned to Judge Robert Drain (19-23802).
Background
Agera supplies electricity and natural gas to 87 distinct utility regions and provides service to approximately 35,000 customers (75% commercial and 25% residential). The debtors say that they offer their customers “energy choice” through the ability to receive electricity and natural gas from a source other than the local utility in certain markets that have been restructured to permit retail competition, “which allows customers to tailor energy supply to their specific needs.” Approximately 28 states have at least partially deregulated their utility markets. The debtors hold licenses to sell retail electricity in 15 states and retail natural gas in 12 states. The debtors have 56 employees after prepetition staff reductions.
The debtors characterize the retail energy business as, by nature, “very competitive,” with low margins. Agera grew “significantly” in the 18-month period through June 2018, the debtors explain in the filings, largely resulting from selling and onboarding customers on fixed price power contracts, which are “inherently riskier” than variable price contracts.
Upon discovery of the company’s financial issues, the management team developed, and presented in late September 2018, a number of strategic options for Eli Global to assess, ranging from a bankruptcy filing to a turnaround plan. Eli Global ultimately committed to a turnaround plan, “with full recognition of the capital necessary to fund the plan.” The debtors’ business was not expected to be profitable until 2020 given that it had to deal with the run-off of low-and negative-margin customer contracts. The debtors say they were executing the turnaround plan up until the unexpected capital liquidity problems, including the defaults and the loss of funding from Eli Global.
The debtors’ corporate organizational structure is below:
The debtors' largest unsecured creditors are listed below:
| 10 Largest Unsecured Creditors | |||
| Creditor | Location | Claim Type | Amount |
|---|---|---|---|
| Massachusetts Department of Public Utilities |
Boston | Alternative Compliance Payment |
$ 43,920,000 |
| Colorado Bankers Life Insurance Company |
Durham, N.C. | Subordinated Loan |
35,699,288 |
| Connecticut Public Utilities Regulatory Authority |
New Britain, Conn. | Alternative Compliance Payment |
8,171,533 |
| New Jersey Board of Public Utilities |
Trenton, N.J. | Alternative Compliance Payment |
7,196,266 |
| Pennsylvania Public Utilities Commission |
Harrisburg, Pa. | Alternative Compliance Payment |
4,907,035 |
| New Hampshire Public Utilities Commission |
Concord, N.H. | Alternative Compliance Payment |
2,009,367 |
| Rhode Island Public Utilities Commission |
Warwick, R.I. | Alternative Compliance Payment |
1,970,394 |
| New York State Energy Research and Development Authority |
Albany, N.Y. | Alternative Compliance Payment |
1,949,058 |
| California Public Utilities Commission |
San Francisco | Alternative Compliance Payment |
1,447,517 |
| Bretton Daniel DeNomme | Avon, Ohio | Employee Commission |
436,807 |
The case representatives are as follows:
| Representatives | |||
| Role | Name | Firm | Location |
|---|---|---|---|
| Debtors' Counsel | Timothy W. Walsh | McDermott Will & Emery |
New York |
| Darren Azman | |||
| Ravi Vohra | |||
| Debtors' Investment Banker |
Richard Klein | Stifel Nicolaus / Miller Buckfire |
New York |
| James Georgiow | |||
| Debtors' Financial Advisor |
N/A | GlassRatner Advisory |
N/A |
| Counsel to the Stalking Horse Bidder |
Cecil E. Martin III | McGuireWoods | Baltimore |
| Counsel to BP Energy | Charles A. Beckham, Jr. | Haynes & Boone |
Houston |
| Kelli S. Norfleet | |||
| Kathryn Shurin | |||
| Arsalan Muhammad | |||
| Counsel to Todd Sandford, Mark Linzenbold and Raima Jamal |
Matthew P. Ward | Womble Bond Dickinson |
Wilmington, Del. |
| S. Alexander Faris | |||
| U.S. Trustee | Andrea B. Schwartz | Office of the U.S. Trustee |
New York |
| Shannon Scott | |||
| Debtors' Claims Agent | Travis Vandell | Stretto | Ivine, Calif. |
Restructuring Support Agreement / Motion to Assume
The debtors seek to assume the RSA term sheet, stressing that without BP’s support, “the Debtors would likely have been forced to file these Chapter 11 Cases as a ‘free fall’ bankruptcy, resulting in additional costs, complications, and potentially significant delays, each of which would have reduced stakeholder recoveries under any restructuring plan.”
The term sheet provides for the following proposed treatment of claims and interests under a plan:
- DIP Financing Claims: Paid in full in cash on the effective date.
- Administrative Expense Claims: Paid in full in cash on the effective date.
- Priority Claims: Either (a) payment in full in cash on the effective date or (b) over a period through the fifth anniversary after the petition date, plus interest.
- Other Secured Claims: Either (a) payment in full in cash from proceeds of the sale allocated to the specific collateral of the claimholder; (b) such other treatment that will render such claim unimpaired or (c) such other treatment as the Agera parties and the applicable claimholder agree.
- Prepetition BP Secured Claims: Receipt of the following, less any amounts necessary to fund “allowed Administrative Expense Claims, allowed Priority Claims, allowed Other Priority Claims, allowed Other Secured Claims, and the Initial Trust Funding under the Plan (and with respect to professional fees, only with respect to amounts provided for in the Approved Budget, subject to the Permitted Variance)”: (a) all remaining cash held by the Agera parties, (b) all sale proceeds, (c) all proceeds from the sale of any other collateral securing any DIP financing claims or prepetition BP secured claims, subject to Other Secured Claims, (d) 90% of the beneficial interests in the Agera litigation trust relating to the litigation and recovery of the litigation trust causes of action and (e) 100% of proceeds of the liquidation of the “Other Litigation Trust Assets.”
- General Unsecured Claims: Pro rata share of 10% of the litigation trust beneficial interests.
- Existing Equity Interests: Cancelled, extinguished and/or discharged.
The RSA term sheet provides for $700,000 for a key employee incentive plan and $1.1 million for a key employee retention plan.
The RSA term sheet provides for the following milestones:
- Interim DIP Financing/Cash Collateral Order: entered within three days of petition date
- Bid Procedures Order: entered within 14 days of petition date
- RSA Term Sheet Approval Order: entered within 17 days of petition date
- Final DIP Financing/Cash Collateral Order: entered within 28 days of petition date
- Auction: within 31 days of petition date
- Sale Hearing: within 32 days of petition date
- Sale Closing: within 60 days after petition date
- Closing of Sale of Mortgaged Property: Dec. 31
- Combined Plan/DS Approval Motion: filed within 135 days of petition date
- Combined Confirmation/DS Approval Order: entered within 180 days of petition date
Stifel, Nicolaus & Co. and Miller Buckfire ran the debtors’ prepetition sale process, which commenced in May, through which it contacted 207 parties, consisting of 121 strategic investors and 86 financial investors, of which 39 executed confidentiality agreements and 20 were provided access to a virtual data room. The debtors say that they received “numerous” preliminary indications of interest in June, leading to the $24.75 million bid from Exelon Generation Company, LLC, which also provides for the assumption of certain liabilities, subject to certain adjustments for the loss of customer contracts not transferred.
The bulk of the assets to be sold under the stalking horse purchase agreement are the debtors’ customer contracts, which would be assumed and assigned to the stalking horse bidder. The stalking horse bidder, according to the debtors, is a “qualified competitive energy supplier in each jurisdiction in which the Sellers operate.” Through the sale, Agera’s existing customers would be transferred to Constellation.
The debtors propose an expense reimbursement up to a cap of 1% of the base price, as well as a 4% termination fee. Initial overbids must exceed the stalking horse bid plus the termination fee and expense reimbursement by $1 million.
The debtors propose the following sale timeline:
- Bid Procedures Objection Deadline: Oct. 14
- Bid Procedures Hearing: Oct. 15
- Bid Deadline: Oct. 29
- Auction: Nov. 4
- Sale Hearing: Nov. 5
Cash Collateral/Supply Facility
The debtors seek approval of DIP financing in the form of (a) the sale of natural gas and electricity on credit from BP Energy Company to Agera Energy, LLC, Aequitas Energy Inc. and energy.me midwest llc (the Agera opco entities), which electricity would be sold in the ordinary course of the debtors’ business to their customers, (b) entry into physically and financially settled hedges with BP Energy Company to hedge the debtors’ exposure to energy price fluctuations “in connection with the customer accounts that the Debtors’ intend to sell in the In-Court Sale” and (c) BP Energy Company’s consent to the continued use of a portion of the debtors’ accounts receivable to fund operating expenses.
“Because the prepetition liens cover substantially all of the Debtors’ assets and are underwater to a significant degree, there is no possibility of securing debtor in possession financing on an unsecured or junior basis or on unencumbered assets,” the debtors stress.
The DIP financing bears interest at LIBOR plus 7.5%, and matures on the earlier of (a) the transfer of all accounts associated with the debtors’ customer contracts to the successful bidder or other third party supplier or the return of such accounts to the applicable utility or local distribution company, (b) the expiry of the “Specified Period” (as defined in the financing motion) and (c) the “Final Assignment Date” (as defined in the Stalking Horse APA).
Adequate Protection
The company proposes the following adequate protection to the prepetition secured parties: replacement liens, superpriority administrative expense claims, payment of all accrued and unpaid fees and expenses including for counsel, and payment on all prepetition obligations under the denior lien transaction documents bi-weekly beginning on Oct. 18 equal to the amount of funds remaining in the collateral accounts and deposit accounts, after giving effect to payments of certain invoices relating to postpetition supply or hedges of natural gas and power, that exceeds $10 million until Dec. 1, 2019, $8 million until Jan. 1, 2020, $6 million until Feb. 1, 2020, and $3 million throughout the remainder of the “Support Period.”
In addition, subject to entry of the final order, the debtors propose a waiver of the estates’ right to seek to surcharge the prepetition and postpetition collateral pursuant to Bankruptcy Code section 506(c) and the “equities of the case” exception under section 552(b).
The carveout for professional fees is $100,000 for the debtors and any official creditors committee, and for Stephen S. Gray or Gray & Company, $50,000 pre-carve out trigger date and $50,000 post-carve out trigger date. Stephen S. Gray was appointed as the sole manager of certain of the debtors and as the sole director of Aequitas. Gray has no prior or current relationship with Eli Global or Lindberg.
DIP Milestones
The DIP financing is subject to the following milestones:
- Bid procedures order: entered within 14 days of petition date
- RSA order: entered within 17 days of petition date
- Final DIP order: entered within 28 days of petition date
- Auction: within 31 days of petition date
- Sale order: entered within 32 days of petition date
- Sale closing: within 60 days of petition date
- Motion Seeking Combined Plan/DS Approval: filed within 135 days of petition date
- Combined Plan/DS Approval Order: entered within 180 days of petition date
The proposed budget is HERE (and can be found attached to the motion to assume the RSA term sheet).
Motion to Impose the Automatic Stay
Prior to the petition date, governmental units in Massachusetts, Rhode Island and New Hampshire have taken acts against the debtors with respect to the debtors’ failure to satisfy their 2018 renewable portfolio standard, or RPS, obligations or alternative compliance payment, or ACP, obligations.
According to the motion, the Massachusetts Department of Energy Resources has recommended to the Massachusetts Department of Public Utilities that it revoke or suspend the retail supplier licenses of Agera Energy. The Rhode Island Division of Public Utilities and Carriers has issued Agera Energy a suspension order, under which Agera is prohibited from entering into new contracts or renewing existing contracts with customers in Rhode Island. The state is scheduled to conduct a public hearing on Oct. 22, 2019, to consider whether Agera’s license to sell energy in Rhode Island should be rescinded. The New Hampshire Public Utilities Commission sent Agera Energy a demand letter on Sept. 17, 2019, requesting that Agera satisfy its ACP liability for 2018 within ten days or it may pursue further action, including referral of the unpaid amount for collection to the New Hampshire Department of Justice.
The debtors say that they “may soon be in default” of their RPS obligations in other states and believe that “a specific order from this Court will help to protect the Debtors from improper actions, particularly from the governmental units that granted the Debtors their licenses, who may not be familiar with the Bankruptcy Code or its protections and who might unwittingly otherwise violate those sections.”
The debtors estimate that their inability to satisfy RPS obligations in the normal course has resulted in an aggregate ACP “premium” of approximately 60%, as compared to the cost of acquiring the renewable energy certificates, or RECs, necessary to avoid ACP obligations. As of the petition date, the debtors estimate that they owe more than $72 million on account of REC and ACP obligations for the 2018 compliance year.
Other Motions
The debtors also filed various standard first day motions, including the following:
- Motion for Joint Administration
- The cases will be jointly administered under case no. 19-23802 (RDD).
- Motion to Pay Service Providers
- The debtors seek approval to pay up to $2.4 million in prepetition service provider claims on an interim basis, with up to $4.3 million in total relief sought on a final basis.
- Motion to Pay Employee Wages and Benefits
- Agera requests authority to pay approximately $232,000 in prepetition wages and approximately $127,000 in deductions.
- Motion to Pay Ordinary Course Professionals
- The debtors seek to pay professionals in the ordinary course of business in the amounts of $100,000 per month on average over any three-month period on a rolling basis for each ordinary course professional and $600,000 in the aggregate through confirmation of a plan for each ordinary course professional.
- Motion to Use Cash Management System
- The company has bank accounts with JPMorgan Chase Bank and First National Bank of Central Texas.
- Motion to Maintain Insurance Programs
- Motion to Pay Taxes and Fees
- The debtors request approval to pay up to $2.3 million in tax obligations on an interim basis, with up to $4.3 million in total relief sought on a final basis.
- Motion to Reject Certain Unexpired Leases
- Motion to Extend the Deadline for Filing Schedules/Statements to Nov. 2
- Motion to Establish Case Noticing, Management and Administration Procedures
- Motion to File Consolidated Lists of Creditors
- Motion to Redact Certain Information from Filings
- Application to Appoint Stretto as Claims Agent
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