Texas' Biggest Power Company Files For Bankruptcy
As they say: Everything is bigger in Texas.
Today, the state's biggest power company filed for one of the biggest Chapter 11 bankruptcy filings in corporate history.
The filing also marks the colossal collapse of a heavily-leveraged $45 billion bet taken by Wall Street private equity firms. As The New York Times reports, back in 2007 firms including "Kohlberg Kravis Roberts, TPG Capital and the private equity arm of Goldman Sachs" took Energy Future Holdings, which used to be known as TXU, private, betting that electricity prices would continue to climb.
Instead, there was a natural gas boom that drove electricity prices down.
"Their investments are expected to be all but be wiped out in the bankruptcy," the Times reports.
"In the past three years, independent power producers Dynegy Inc. and Edison Mission Energy, a unit of Edison International, have sought bankruptcy protection amid a collapse in electricity prices.
"Today's filing has already drawn objections from one group of creditors, who accused Dallas-based Energy Future's executives of mismanagement.
"The trustee for some junior noteholders of the Energy Future unit Texas Competitive Electric Holdings attacked the bankruptcy deal, accusing managers of 'disabling conflicts of interest.'"
Reuters reports that Energy Future's bankruptcy "was on par with those of Pacific Gas & Electric Co and Enron in 2001 but trailed behind the $691 billion in assets the investment bank Lehman Brothers had when it blew up in 2008, according to Bankruptcydata.com."