A U.S. judge has agreed to halt U.S. creditor lawsuits against Abengoa SA, an international renewable energy company that has been waging a multi-layer battle for more than a year to avoid becoming Spain’s largest ever corporate failure.
A ruling on a more contentious dispute involving the Seville-based company’s bankrupt U.S. subsidiary and a failed power plant is still pending.
The company put its U.S. subsidiaries in Chapter 11 bankruptcy and filed for Chapter 15 protection from creditors of non-U.S. businesses earlier this year while it thrashed out a $10 billion global debt restructuring deal in Spain.
Last month Abengoa received shareholder and Spanish court approval for its high-stakes debt-for-equity deal, and on Thursday won backing for that plan and the halt to U.S. creditor lawsuits from the U.S. court in Delaware that is overseeing the U.S. bankruptcy proceedings.
U.S. Bankruptcy Judge Kevin Carey must still rule on a plan to enable Abengoa’s main subsidiary, Abeinsa Holding Inc, a construction and engineering business, to emerge from U.S. Chapter 11.
The decision, expected soon, is a final hurdle for the Spanish company to complete a global debt plan and avoid its own bankruptcy.
At a confirmation trial this week, Abeinsa’s bankruptcy exit plan faced objections from a holdout creditor, Portland General Electric Corp, that has sued the company over alleged cost overruns and construction defects at a power plant in Oregon.
In its lawsuit PGE blamed the project’s failures on the financial problems of Abengoa, the parent company.
Abengoa plans to retain full control of its U.S. units when they exit bankruptcy in exchange for a roughly $30 million investment, while creditors will receive only pennies on the dollar.
The plan also met with criticism from the U.S. Trustee, a government watchdog that polices conflicts in bankruptcies. It objected to provisions that grant broad releases for Abengoa from lawsuits.