As referenced in a prior post, on April 7th, Pacific Sunwear of California, Inc. (aka PacSun, aka Pacific Sunwear) filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware.

On April 8th, the Court entered an Interim Utilities Order (click here), which among other things sets forth deadlines for utility providers to object to the proposed adequate assurance procedures or the amount of adequate assurance.  The exhibits to the Interim Utilities Order (click here), set forth a proposed final order which establishes the proposed amount of adequate assurance of payment to each utility provider of the Debtors under Section 366 of the Bankruptcy Code.  The adequate assurance amount proposed by the Debtors represents the average amount owed to such utility provider over a two-week period.

Any Pacific Sunwear utility provider looking to object to the proposed adequate assurance amount or the procedures should act quickly.  By way of brief background, Section 366 of the Bankruptcy Code was enacted to balance a debtor’s need for utility services from a provider that holds a monopoly of such services, with the need of the utility to ensure for it and its rate payers that it receives payment for providing these essential services.  See In re Hanratty, 907 F.2d 1418, 1424 (3d Cir. 1990). The amount of adequate assurance required is made on a case-by-case determination and, in making such a determination, it is appropriate for the Court to consider “the length of time necessary for the utility to effect termination once one billing cycle is missed.”  In re: Begley, 760 F.2d 46, 49 (3d Cir. 1985).

Per the interim order, a final hearing on the Debtors’ utilities motion has been scheduled for May 3, 2016 at 3:00 p.m.  Objections to the proposed final order must be filed on or before April 25th at 4:00 p.m.  This bankruptcy case is pending before Judge Laurie Selber Silverstein.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272.

The Spanish renewable energy solar company giant, Abengoa SA and its American affiliates, have filed for bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware.  The Spanish energy company continues talks with its banks and bondholders to agree on its plan to restructure billions of dollars in debt.

Background

Abengoa is one of the world’s top builders of power lines transporting energy across Latin America and a top engineering and construction business, making large renewable-energy power plants in places from Kansas to the United Kingdom.

Additionally, on March 28, 2016, Abengoa S.A., the parent company of the debtors, and approximately twenty affiliated Spanish companies (the “Chapter 15 Debtors”), filed petitions for relief under chapter 15 of the Bankruptcy Code in this Court.

Debtors’ Utilities Motion

The furnishing of utilities to the Abengoa Debtors will become an issue of import in this case.  According to the Declaration of William H. Runge, III in support of the Abengoa Debtors’ first day pleadings:

Uninterrupted Utility Services are essential to the Debtors’ business operations during the pendency of these cases. Should any Utility Company alter, refuse or discontinue service, even for a brief period, the Debtors’ business operations could be severely disrupted, and such disruption would jeopardize the Debtors’ efforts. It is essential that the Utility Services continue uninterrupted.

Along these lines, at the first day hearing, the Debtors obtained an interim utilities order, which among other things approved: (i) the Debtors’ proposed form of adequate assurance, (ii) establishing procedures for resolving objections by utility companies, (iii) prohibiting utility companies from disconnecting service, and (iv) scheduling a final hearing.

Under the interim utilities order, a final hearing on the Debtors’ utility motion is April 27th at 10:00 a.m., and the objection deadline is 7 days prior.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272.