Cases & Deals

Oncor Electric Delivery Company shielded from Energy Future Holding's chapter 11 bankruptcy

Client(s) Oncor Electric Delivery Company LLC

Jones Day represented Oncor Electric Delivery in connection with the restructuring and chapter 11 case of its then 80% owner, Energy Future Holdings ("EFH"). In addition, to playing a key role in the sale of EFH's equity interests to Sempra, the assignment encompassed actively monitoring the bankruptcy of its 80% parent to ensure that it would not impact Oncor's operations, capital structure or the regulatory mandate that was intended to protect Oncor from the massive debt incurred at EFH. Jones Day acted to protect Oncor from incursions by EFH's creditors, direct and indirect through governance. Jones Day's work included assuring the separate integrity (and at times separation) of joint programs, such as for example, pensions. In addition, Jones Day counseled Oncor and its board on their responsibilities given the ownership structure, the chapter 11 case of its 80% equity holder and the interest of its minority interest partners. Jones Day counseled Oncor on the various tax and related implications of any transaction selling or otherwise monetizing EFH's 80% equity interest in Oncor in the EFH bankruptcy case. EFH's sale efforts went through two unsuccessful attempts to effect a change of control: the first was working through a potential REIT acquiror, followed by an auction the winner of which failed to receive regulatory clearance to consummate the proposed acquisition; the following auction among strategic players, which implicated governance, the role of Oncor management, various financings, the ring fence, the tax structure of the transaction as well as the governance and related rights of Sempra as the purchaser of EFH's 80% interest. Jones Day advised in all but the regulatory aspects.