We advised the agent and an ad hoc group of secured lenders on the transaction

Davis Polk advised the agent and an ad hoc group of revolving and term loan lenders in connection with the chapter 11 bankruptcy of Ector County Energy Center LLC, a wholly owned subsidiary guarantor of Invenergy Thermal Operating I LLC, the borrower under the credit facility.

Prior to bankruptcy filing, Invenergy and Ector entered into a plan support agreement and a credit agreement amendment that facilitated the bankruptcy of Ector without creating a default under the Invenergy credit facility, along with increased interest rate and other improved lender terms. Ector filed for bankruptcy in April 2022 and conducted a section 363 sale of its assets that yielded approximately $145 million in proceeds. During the bankruptcy case, Ector’s main unsecured creditor, Direct Energy, which asserted a $400 million unsecured claim, challenged the cash collateral order and prepetition credit agreement amendment, and also sought standing to assert derivative claims against the Invenergy borrower and the secured lenders. After contested hearings, the Bankruptcy Court ruled in favor of Ector and the secured lenders on these key issues. During the course of Ector’s bankruptcy case, revolving loan lenders also upsized their commitments under the Invenergy facility. Ultimately, a global settlement was negotiated in a mediation moderated by former bankruptcy Judge Sontchi that resolved all disputes among Direct Energy, the secured lenders, the debtor and its non-debtor affiliates. That settlement, among other things, resulted in repayment of $75 million of the outstanding amount under the Invenergy credit agreement from Ector sale proceeds and includes full releases among all the parties. A plan reflecting the settlement terms was confirmed and became effective.

Invenergy is a financially healthy global developer and operator of sustainable energy, with 190 projects across four continents.

The Davis Polk restructuring team includes partner Brian M. Resnick, counsel Josh Sturm and associates Stella Li and Sophy Ma. The litigation team includes partner Elliot Moskowitz and associates Sean Stefanik and Josh Pitkoff. The finance team includes counsel Jon Finelli and associates Alexander K.B. Shimamura and Amber Leary. All members of the Davis Polk team are based in the New York office.