Power producer Dynegy Inc. announced Thursday it has settled disputes with creditors, bringing one of its subsidiaries closer to emerging from bankruptcy protection.
The Houston-based company said it reached an agreement with creditors holding more than $2.5 billion in claims after Dynegy Holdings LLC filed for bankruptcy on Nov. 7.
The creditors claimed Dynegy shielded assets before declaring bankruptcy. The parent company allegedly took coal-powered plant assets, valued at $1.25 billion, from Dynegy Holdings on Sept. 1, ahead of the bankruptcy. A court-appointed bankruptcy examiner submitted report backing their claims, calling the move a fraudulent transfer, according to Reuters.
Not all noteholders have signed the settlement. Some creditors have also alleged that Dynegy Holdings protected major equity investors such as Carl Icahn and Seneca Capital.
The parties have taken a pragmatic approach and have the company back on track to put the Dynegy Holdings Chapter 11 case behind it during the third quarter, Robert Flexon, chief executive of Dynegy and Dynegy Holdings, said in a statement.
Dynegy said the agreement resolves legal disputes against its holdings subsidiary. It will not be finalized until a court approves the deal.