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GenOn Energy Bankruptcy Objection Filed

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The City of Pittsburg filed with the U.S. Bankruptcy Court an objection to GenOn Energy’s expedited motion for an order approving a global settlement.

The city asserts, “The City has objected to confirmation of the Plan on the grounds that, among other things, the Plan is un-confirmable because the Plan impairs the City’s claims by limiting the City to its ‘allowed’ claim and not the claim that the City holds under applicable non-bankruptcy law. The City objects to approving the Settlement Motion before the Plan is confirmed because the Settlement Motion would grant holders of GAG Note Claims an Administrative Claim that is not being granted to other unsecured creditors.”

In addition, “In the Settlement Motion, the Debtors propose to grant ‘the Holders of Allowed GAG Note Claims an Administrative Claim against GenOn in an amount equal to the value of the treatment afforded to Holders of Allowed Class 5 GAG Notes Claims under the Plan[.]’ This GAG Administrative Claim shall be allowed ‘irrespective of whether the Plan is consummated.’ In addition, an order approving the Settlement Motion ‘may be entered at any time prior to the Confirmation Order if the GenOn Steering Committee consents to such earlier entry.’ Thus, the Settlement Motion seeks to provide certain, but not all, unsecured creditors of the Debtors with an administrative claim whether or not the Plan is confirmed. The City objects to approval of the Settlement Motion to the extent that the Settlement Motion seeks to elevate Holders of Allowed GAG Note Claims above Holders of General Unsecured Claims (like the City’s claims) prior to confirmation of a plan providing that Holders of General Unsecured Claims will be unimpaired pursuant to Bankruptcy Code section 1124. Absent such a condition, Holders of Allowed GAG Note Claims will be in a much better position that other similarly situation unsecured creditors if the Settlement Motion is granted and the Plan is not confirmed.”

Read more GenOn Energy bankruptcy news.

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