By Steven Church
On its first day in bankruptcy court, Griddy lawyers outlined a plan to liquidate, settle with customers and, possibly, arrange lawsuits against those that the company blames for its collapse.
U.S. Bankruptcy Judge Marvin Isgur called Griddy’s bankruptcy proposal “unique and really unprecedented.” Isgur, who has overseen some of the biggest corporate restructurings filed in recent years, pushed Griddy to ensure that customers understand how the bankruptcy case will affect their huge electric bills after first criticizing Griddy’s attempt to pay one of its lenders as the case goes forward.
Customers face an average bill of about $1,100 because of the winter storm that sent power prices surging, Isgur said. If Griddy wants to cancel those charges in exchange for customers dropping potential lawsuits, the company must clearly let people know that, Isgur said.
“This is a difficult case,” Isgur said. “I really am worried that we handle it properly.”
Griddy filed for bankruptcy on Monday, blaming its woes on the Electric Reliability Council of Texas, which runs the state’s power grid. During the storm, Ercot, as it is known, pushed up wholesale power prices dramatically under rules Texas lawmakers have adopted that deregulated much of the state’s electric industry over the course of several decades. Griddy was barred from the state’s power markets in late February after failing to make a payment.
Griddy charged wholesale prices instead of fixed ones. Knowing that rate structure would mean massive bills for its customers as power prices climbed, the company made the unusual move of pleading with them to switch to another provider in mid-February. Some customers who didn’t switch in time were stuck with bills for thousands of dollars.
Isgur told the main lawyer suing Griddy on behalf of customers that the company deserves some credit for making that effort.
“I’m not seeing someone here that set out to do something wrong,” Isgur said of the company. “But I may have someone here who may have done something wrong. It is way too early to make that determination.”
Griddy will try to win final approval for its liquidation plan from Isgur within 85 days, Robin Spigel of Baker Botts said in court on behalf of the power company.
One option being considered is to hire an administrator who would decide whether to file lawsuits to try to collect money that would go to Griddy’s creditors, Spigel said.
The case is Griddy Energy LLC, 21-30923, U.S. Bankruptcy Court for the Southern District of Texas (Houston). To view the docket on Bloomberg Law, click here.