ExGen Texas Power LLC, an Exelon Corp. Subsidiary Files for Bankruptcy, Blames Cheap Gas Prices and Wind Power

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New York, Nov. 07, 2017— Exelon Corporation (NASDAQ: EXC) subsidiaries ExGen Texas Power LLC and its affiliate ExGen Texas Power Holdings LLC (together, the “Debtors” or “ ExGen ”) filed joint petitions for protection under Chapter 11 of the Bankruptcy Code on November 07, 2017 in the District of Delaware under Case No. 17-12377.[1]

ExGen has employed the law firm of Richards, Layton & Finger, P.A. as general bankruptcy counsel, the firm Scotia Capital (USA) Inc. as Investment banker, FTI Consulting, Inc. as restructuring advisor, and Kurtzman Carson Consultants LLC as notice and claims agent and administrative advisor.[2]

ExGen Texas Power, identified in court documents as “EGTP,” and the Debtors were formed in 2014 by Exelon Corp. as project companies and owns 100% equity interest of the Debtors.[3] Collectively, the debtors own 5 separate natural gas-fired power generators providing 3,311 Mega Watts of natural gas power to the North and Houston zones of the Electric Reliability Council of Texas (ERCOT), servicing 90% of the State, about 24 million Texans.[4] The Debtors have no employees as Exelon provides all support under various affiliate agreements, including 2002 International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements, which allow the sale of natural gas between the two companies on a price based on a published index.[5] Therefore, without any form of employee compensation, the Debtors seek to pay their post-petition obligations to Exelon.[6]

The Debtors blamed “the downturn in the energy sector over the past few years” as the catalyst for the detriment on their revenue, cash flow, and liquidity.[7] Natural gas market prices have declined due to demand being outpaced by new supply and declining prices.[8] Following was wind power bringing the wholesale power prices lower; wind power capacity added to the grid with the increasingly flat demand, exacerbating ExGen’s liquidity constraints.[9] Lastly, changing weather patterns in the ERCOT market, particularly Hurricane Harvey, decreased demand during the summer which has historically been the Debtor’s profitable months.[10] ExGen filed bankruptcy to address its $675 million loan due in September 2021.[11]

Since the start of January 2017 the Debtors engaged in extensive negotiations for liquidity solutions, including refinancing, sale, and disposition of the plants.[12] By May 2017 the Debtors entered into a Waver Agreement with Secured Lenders to survive the summer with additional liquidity, thus commencing restructuring efforts and employing professionals such as investment bankers for the marketing and sale process.[13] A Sale Process Committee was formed and employed Scotia Capital to identify potential buyers and received non-disclosure agreements and non-binding initial letters of intent throughout the summer; however, out of the 145 interested parties and 7 final bids, only Exelon submitted the sole final bid to acquire the Handly Power project.[14]

Out of the 5 power generator projects owned by ExGen, Handly Power, LLC has the highest summer power capacity at 1,265 MW for ERCOT,[15] which Exelon bid $60 million cash to acquire.[16] The Debtor’s advisors and Secured Lenders Ad Hoc Committee viewed the Exelon bid as a stalking horse, and without a bid for the remaining 4 projects they would take ownership through a Chapter 11 Reorganization and convert the outstanding loans into new equity.[17] The Debtor’s Chief Restructuring Officer, David Rush, explained the importance of the stalking horse bid in court documents,

The Debtors believe that effectuating the sale of the Handley Project to ExGen pursuant to the Stalking Horse Agreement, coupled with the implementation of the Proposed Plan, including the Sponsor Compromise, allows the Debtors to avoid a drawn-out and potentially expensive bankruptcy which would detract from other value-maximizing initiatives, and overall represents the best option for the Debtors to maximize the value of the enterprise.[18]

In a news statement, Exelon addressed the decision for the ExGen Bankruptcy filing, “[the] filings help to facilitate the planned transactions and provide additional tools to reduce the amount of debt the plants would otherwise take forward, thereby maximizing their opportunities for long-term success.”[19] Exelon told the Securities Exchange Commission that it anticipates a pre-tax gain of $125 million to $200 million in the fourth quarter of 2017 from the sale.[20]

Court filings and other information about this bankruptcy case are available at http://www.kccllc.net/EGTP.


Cristina Lipan is a bankruptcy attorney and partner with the law firm of Shipkevich PLLC. Cristina is admitted in the Southern and Eastern Districts of New York and regularly practices before the United States Bankruptcy Court. For more information on this matter, you can reach Cristina at 646-867-0098 or at clipan@shipkevich.com





  • [1] Voluntary Petition for Non-Individuals Filing for Bankruptcy, Doc. No. 1, Case No. 17- 12377, D. Del. Filed November 07, 2017 (the “Petition”).
  • [2] Petition, Written Consent of The Sole Member of The Restructuring Committee of ExGen Texas Power, LLC (No. 17- 12377)
  • [3] Declaration of David Rush, In Support of Chapter 11 Petitions and First Day Motions, Doc. No. 12, Case No. 17- 12377, D. Del. Filed November 07, 2017 (the “Declaration of David Rush”), ¶ 11.
  • [4] Declaration of David Rush, ¶¶ 9,10.
  • [5] Declaration of David Rush, ¶¶ 12-15.
  • [6] Declaration of David Rush, ¶ 16.
  • [7] Declaration of David Rush, ¶ 22.
  • [8] Declaration of David Rush, ¶ 22.
  • [9] Declaration of David Rush, ¶ 23.
  • [10] Declaration of David Rush, ¶ 24.
  • [11] Exelon Corporation. (2017, November 07). Form 8-K. Retrieved from https://www.sec.gov/Archives/edgar/data/1109357/000162828017011018/exc201711078k.htm (the “Form 8-K”)
  • [12] Declaration of David Rush, ¶ 25.
  • [13] Declaration of David Rush, ¶ ¶ 26, 27.
  • [14] Declaration of David Rush, ¶ ¶ 28, 30.
  • [15] Declaration of David Rush, ¶ 7.
  • [16] Declaration of David Rush, ¶ 30.
  • [17] Declaration of David Rush, ¶ 31.
  • [18] Declaration of David Rush, ¶ 34.
  • [19] Exelon.com, Statement on Exelon Generation Texas Power LLC, Nov. 07, 2017, http://www.exeloncorp.com/newsroom/statement-on-exelon-generation-texas-power-llc
  • [20] Form 8-K.
  • Image Credit: Natural gas pipeline USA by Bilfinger SE via CC Licensing

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