The bankruptcy court for Longview Power LLC on Jan. 20 approved both three settlements with opposing parties, and an extension of Longview's exclusive deadline for filing a reorganization plan that will largely be based around those settlements.
In one decision, the U.S. Bankruptcy Court for the District of Delaware approved settlements with power plant contractors Kvaerner and Siemens (NYSE: SI), and also insurer First American. Longview had months ago settled with Foster Wheeler, the third contractor that late last decade helped it build the coal-fired Longview power plant in northern West Virginia. Longview had claimed that the 700-MW (net) plant had a number of defects on completion, never ran right, and it had been pursuing claims against the three contractors.
"After nearly sixteen months of hard-fought litigation in these chapter 11 proceedings, more than three years of parallel litigation in the Debtors' pending arbitration proceedings, multiple rounds of negotiation, and court-ordered mediation, the Debtors, the Settling Contractors, and First American have agreed to settle their disputes (collectively, the 'Settlements') in order to fully and finally resolve their differences," said the Jan. 2 notice of settlement filed with court. "By this Motion, the Debtors seek approval of interlocking Settlement Agreements with each of FirstAmerican, Kvaerner, and Siemens, thereby resolving, among other things: (a) the status of the Debtors' asserted rights to the Title Policy Proceeds available under the $775 million First American Title Insurance Policy, including the Debtors' pending coverage action with respect thereto; (b) the more than $335 million of mechanics' liens asserted by the Settling Contractors with respect to the Longview Power Facility (as defined herein) and related properties, and the pending state court actions seeking enforcement of the same; (c) the pending lien priority action commenced by First American in September 2014; and (d) the mutual claims asserted by and against the Debtors, First American, and each of the Settling Contractors.
"Perhaps more fundamentally, the Settlements are predicated on a substantial contribution of value by Siemens in the form of repairs, technical services, and related warranties for the turbine generator portion of the Longview Power Facility at no cost to the Debtors," the Jan. 2 filing added.
A second Jan. 20 order from the court extends the exclusive filing deadline for a reorganization plan from Longview to Feb. 28, and a deadline to solicit creditor acceptances of that plan to April 30.
In August 2013, Longview Power and related companies, including Northern Appalachia coal producer Mepco LLC, sought protection under chapter 11 of the Bankruptcy Code.