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In re Energy Future Holdings Corp.

United States District Court, D. Delaware

January 24, 2019

IN RE ENERGY FUTURE HOLDING CORP., et al., Debtors.
v.
DEBTORS ENERGY FUTURE HOLDINGS CORP., et al, AND THE EFH PLAN ADMINISTRATOR BOARD, Appellees. SHIRLEY FENICLE, INDIVIDUALLY, AND AS SUCCESSOR-IN-INTEREST TO THE ESTATE OF GEORGE FENICLE, DAVID WILLIAM FAHY, JOHN H. JONES, DAVID HEINMANN, HAROLD BISSELL, KURT CARLSON, ROBERT ALBINI, INDIVIDUALLY, AND AS SUCCESSOR-IN-INTEREST TO THE ESTATE OF GINO ALBINI, AND DENIS BERGSCHNEIDER, Appellants;

         Chapter 11

          Daniel K. Hogan, HOGAN MCDANIEL, Wilmington, DE, attorney for Appellants.

          Leslie M. Kelleher (argued) and Jeanna M. Koski, CAPLIN & DRYSDALE, CHARTERED, Washington, DC, attorneys for Appellants Shirley Fenicle, individually and as successor-in-interest to the Estate of George Fenicle, and David William Fahy.

          Steven Kazan, KAZAN MCCLAPN SATTERLEY & GREENWOOD, Oakland, CA, attorney for Appellants Shirley Fenicle, individually and as successor-in-interest to the Estate of George Fenicle, and Denis Bergschneider.

          Jeffrey M. Schlerf, FOX ROTHSCHILD LLP, Wilmington, DE; Thomas E. Lauria, Matthew C. Brown, and Joseph A. Pack, WHITE & CASE LLP, Miami, FL; J. Christopher Shore (argued), WHITE & CASE LLP, New York, NY, attorneys for Appellee Reorganized EFH/EFIH Debtors.

          Jason M. Madron, RICHARDS, LAYTON & FINGER, P.A., Wilmington, DE; Mark McKane (argued), KIRKLAND & ELLIS LLP, San Francisco, CA; James H.M. Sprayregen, Marc Kieselstein, Chad J. Husnick, KIRKLAND & ELLIS LLP, Chicago, IL; Aparna Yenamandra, KIRKLAND & ELLIS LLP, New York, NY, attorneys for Appellee EFH Plan Administrator Board.

          MEMORANDUM OPINION

          ANDREWS, U.S. DISTRICT JUDGE.

         Currently pending before the Court is an appeal from the Bankruptcy Court's Order Confirming the First Amended Joint Plan of Reorganization of Energy Future Holdings Corp. ("the Confirmation Order"). (D.I. 1-1). Also pending is Appellees' Motion to Dismiss the Appeal. (D.I. 40). The parties have fully briefed the issues. (D.I. 30, 40, 54, 59). The Court held oral argument on December 13, 2018. (D.I. 64). For the following reasons, the Court dismisses the appeal as statutorily moot.

         I. BACKGROUND

         Energy Future Holdings Corp. ("EFH") and several subsidiaries (together, the "Debtors") filed Chapter 11 petitions on April 29, 2014. (D.I. 30 at 13). A subsidiary of EFH, Debtor Energy Future Intermediate Holding Company LLC, held approximately 80% ownership interest in Oncor Electric Delivery Company LLC ("Oncor"). (Id.). Oncor is subject to the regulatory authority of the Public Utility Commission of Texas ("PUCT"). (Id.) Previous plans were approved by the Bankruptcy Court but did not become effective because PUCT did not approve the necessary transactions. (Id.) The Confirmed Plan incorporates a merger transaction between Sempra Energy ("Sempra") and Debtor EFH. (Id.). PUCT approved the transaction with Sempra, and the Confirmed Plan became effective March 9, 2018. (Id; D.I. 40 at 33).

         Debtors EECI, Inc., EEC Holdings, Inc., LSGT Gas Co. LLC, and LSGT SACROC, Inc. (the "Asbestos Debtors") are wholly-owned subsidiaries of EFH. (D.I. 30 at 14). The Asbestos Debtors were in the business of building, maintaining, and servicing power plants. (Id.) Workers in those power plants were exposed to asbestos. (Id.) The last of the Asbestos Debtors' operating assets were sold in 2004 and the proceeds of those sales were up-streamed to EFH as interest bearing loans. (Id.).

         During the bankruptcy proceedings, the Debtors moved the Bankruptcy Court to set a bar date for all prepetition claims (the "Bar Date Motion"). (Id. at 15). The United States Trustee appointed an official creditors' committee comprising five unsecured creditors of EFH, EFIH, EFIH Finance, Inc., and EECI (the "E-Side Committee"). (D.I. 30 at 16; D.I. 40 at 19). After hearing objections on the Bar Date Motion, the Bankruptcy Court ordered that there would be a bar date for all prepetition claims, including those of Unmanifested Asbestos Claimants.[1] (D.I. 30 at 16; D.I. 40 at 20). This order was not appealed by any party. (D.I. 40 at 21). As the bankruptcy proceedings continued, Appellants[2] made repeated efforts to ensure that the Unmanifested Asbestos Claims were not discharged. (D.I. 40 at 24-30).

         The Confirmation Order was entered on February 27, 2018. (B.D.I. 12763).[3] The Confirmation Order approved the reorganization plan ("the Plan"), including the Merger Agreement, a central piece of the restructuring transactions.[4] The Plan and Merger Agreement, as approved, provided for the restructuring of the EFH and Asbestos Debtors, including the sale of the EFH Debtors to Sempra. Appellants did not seek a stay of either the Order authorizing the merger agreement or the Confirmation Order. Appellants filed a timely notice of appeal on March 9, 2018. (D.I. 1). On appeal, Appellants assert, among other things, that the Bankruptcy Court erred in discharging the claims of Unmanifested Asbestos Claimants who failed to timely file proofs of claim. (D.I. 30 at 21).

         Appellees[5] move to dismiss this appeal on the following grounds: statutory mootness, equitable mootness, untimeliness, and standing. (D.I. 40 at 22). Appellees also argue that the Bankruptcy Court did not violate Due Process by discharging the claims of the Unmanifested Asbestos Creditors who failed to timely file proofs of claim. (Id. at 56). The constitutional issue is an interesting one. Courts should, however, avoid deciding ...


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