Davis Polk Advises Noteholders in Connection with GenOn Energy, Inc.’s Emergence from Bankruptcy
12/20/2018

Davis Polk advised an ad hoc group of holders of 7.785% senior notes due 2017, 9.50% senior notes due 2018 and 9.875% senior notes due 2020, in connection with the successful chapter 11 restructuring of GenOn Energy, Inc. and certain of its affiliates (“GenOn”). Pursuant to a plan of reorganization, GenOn completed sales of its Hunterstown and Canal generating stations, entered into a sale agreement with respect to its Choctaw station, amended its leases for its Morgantown and Dickerson stations, restructured two leveraged leasing subsidiaries and repaid bonds issued by its subsidiary GenOn Americas Generation, LLC at a discount pursuant to a consensual settlement. Through the restructuring, GenOn extinguished approximately $1.8 billion of prepetition debt, distributed $790 million in cash to holders of its prepetition notes and transferred substantially all of its remaining assets to a newly-formed company, GenOn Holdings, Inc., which is owned by the prepetition noteholders. Following the completion of these restructuring transactions, GenOn Holdings, Inc. has $400 million of corporate debt, including takeback paper issued to noteholders and a $125 million revolving credit facility, and strong credit metrics. 

The reorganization was initiated with a Chapter 11 filing on June 14, 2017, and included a separate reorganization and bankruptcy filing of GenOn’s wholly owned subsidiary NRG REMA LLC (“REMA”), which filed on October 16, 2018. GenOn’s plan of reorganization was confirmed by the Bankruptcy Court for the Southern District of Texas on December 12, 2017, and REMA’s plan of reorganization on November 1, 2018. The reorganization concluded with the simultaneous emergence of GenOn and REMA from bankruptcy on December 14, 2018.

Davis Polk’s integrated corporate and litigation teams collectively drove all aspects of GenOn’s complex restructuring, including GenOn’s various asset sales, designing GenOn’s new corporate structure, developing and implementing tax-efficient exit structures and other tax-related arrangements, negotiating management incentive plans and other key executive compensation policies and structuring, negotiating and drafting the indenture for $400 million of new second-lien secured notes.

In addition, the Davis Polk litigation, tax and restructuring teams negotiated global settlements with GenOn’s former parent NRG Energy, Inc., holders of notes issued by GenOn Americas Generation, and equity holders and debt holders of lessors of GenOn Mid-Atlantic, LLC and REMA and plaintiffs in the multi-district antitrust litigation matter captioned In re Western States Wholesale Natural Gas Antitrust Litigation. Among other things, these settlements provided for the release of certain prepetition claims asserted by certain GenOn noteholders against NRG Energy, operational support from NRG Energy during the post-confirmation transition and material amendments to each of GenOn Mid-Atlantic’s and REMA’s leases. 

GenOn is a wholesale generator of electricity using natural gas, coal and oil resources and one of the largest independent power producers in the United States. The company also owns and operates power generation facilities and trades in energy, fuel and transportation services. It is based in Houston, Texas. 

The Davis Polk restructuring team included partners Damian S. Schaible and Eli J. Vonnegut and associates Angela M. Libby and Benjamin M. Schak. The corporate team included partner William L. Taylor and counsel Ajay B. Lele. The tax team included partner William A. Curran and counsel Leslie J. Altus and Patrick E. Sigmon. The litigation team included partner James I. McClammy. All members of the Davis Polk team are based in the New York office.