Milbank has successfully represented the Official Committee of Unsecured Creditors of FirstEnergy Solutions Corp. (“FES”) and its affiliated debtors in their chapter 11 cases, which were filed in the Northern District of Ohio on March 31, 2018. FES is one of America’s largest utilities. Headquartered in Akron, Ohio, FES operates one of the nation's largest investor-owned electric systems, more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions, and a diverse generating fleet with a total capacity of more than 16,000 megawatts.
As of December 31, 2017, FES listed $5.5 billion in total assets against $1.25 billion in total current liabilities, $2.3 billion in long-term debt and other long-term obligations and $4.0 billion in non-current liabilities, consisting of sale and leaseback obligations, retirement benefits and asset retirement obligations.
In recent years, FES’s coal and nuclear operations have faced difficult market conditions as a result of the increased presence of inexpensive natural gas and penetration of renewables, persistent depressed power prices, disappointing capacity auction results, flat electricity demand, costly environmental regulations, and limited weather volatility. Approximately $515 million of debt was scheduled to mature in 2018, beginning with a $100 million principal payment due by April 2, 2018. Given FES’s senior unsecured debt rating, capital structure, and long-term cash flow projections, the company believed that the debt maturities were unlikely to be refinanced consensually.
As counsel to the Official Committee, Milbank played an instrumental role representing the Official Committee in the negotiation of the global settlement with FES’s non-debtor affiliates and the confirmation proceedings in connection with FES’s plan of reorganization. On October 15, 2019, the Court confirmed FES’s chapter 11 plan, which received broad support from FES’s creditors. The reorganized company emerged from bankruptcy protection as Energy Harbor Corp. on February 27, 2020. Upon emerging from chapter 11, the equity of the reorganized company will be owned by major bondholders.
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