On behalf of Law Offices of Mark M. Kratter, LLC on January 17, 2013
A Connecticut town is the recipient of a sizeable check after a bankruptcy court determined its claim against a power plant had priority over other creditors. The plant filed for Chapter 7 bankruptcy slightly over a year ago and had to lay off its entire workforce. Before its bankruptcy, the power plant contributed the largest amount of taxes to the town, totaling over $1 million annually.
The Chapter 7 bankruptcy filing resulted in the closure of the plant, but so far there is not much optimism about the plant being able to recover and start back up. In addition to its financial troubles, coal-fired power plants are under increased scrutiny from environmental groups and the government. The mayor stated he couldn't imagine the power plant being able to recover and start again, especially with the current state of the energy market.
Before the bankruptcy filing, the power plant had been a staple in the community for over 20 years. It was one of only two power plants using coal in Connecticut, and the value of its property was estimated at $162 million about two years ago. However, that value dropped drastically in 2011 by over $100 million. In Nov. 2012, the parent company announced it was undergoing corporate restructure, an action that may have contributed to the bankruptcy filing.
Chapter 7 bankruptcy may be the best choice for some Connecticut companies that are struggling financially. This company appeared to be affected by its parent company's restructure and the ever-changing energy market. Filing for bankruptcy can often help companies discharge debts and provide an orderly and protected method for liquidation of assets.
Source: NorwichBulletin.com, "Montville gets $2.3M from AES power plant bankruptcy," James Mosher, Jan. 2, 2013
