US restructuring team successfully represents Brazos Electric Power Cooperative, Inc. in its Chapter 11 case

Our US restructuring team recently completed its representation of Brazos Electric Power Cooperative, Inc. (Brazos) in its Chapter 11 case. Brazos's Chapter 11 plan was confirmed by the US Bankruptcy Court for the Southern District of Texas (The Honorable David R. Jones) on November 14, 2022, resulting in Brazos successfully restructuring and emerging from bankruptcy following 22 months in Chapter 11.

Brazos is Texas's oldest and largest generation and transmission electric cooperative and sought bankruptcy protection after being charged more than US$2.2 billion by Electric Reliability Council of Texas, Inc. (ERCOT) for wholesale power purchased over a weeklong period during Winter Storm Uri, the unprecedented winter event that blanketed Texas in snow and freezing temperatures in February 2021.

During the Chapter 11 case, Brazos vigorously contested ERCOT's asserted claim, among other Winter Storm Uri-related charges. After abating the ERCOT trial in favor of mediation overseen by United States Bankruptcy Judge Marvin Isgur, numerous settlements were reached among Brazos and its various counterparties, including ERCOT, which formed the basis for Brazos's plan of reorganization. The plan embodied six separate settlements, including a full resolution of the ERCOT claim among others. Brazos also reached a settlement with its unsecured creditors' committee, agreeing to pay a minimum of 89.5 percent on allowed general unsecured claims; Brazos settled nearly US$1 billion in asserted claims relating to Brazos's rejection of certain power purchase agreements ultimately agreeing to an aggregate allowed unsecured claim of approximately US$419 million; and Brazos reached settlements with other major creditors and achieved a reduction of over US$1.3 billion in asserted claims.

In addition and as part of the plan, Brazos agreed to wind down its power-supply business and sell its generation assets following its emergence from Chapter 11, thereby forming "Brazos 2.0," which will continue to be a transmission and distribution cooperative. Brazos also agreed to create and fund a US$140 million ratepayer hardship fund for low-income ratepayers to help offset electric bill surcharges stemming from the securitization and financing transactions that Brazos and 15 of its 16 member distribution cooperatives incurred to fund plan distributions.

The Chapter 11 plan went effective on December 15, 2022.

Norton Rose Fulbright's team representing Brazos was led by Jason L. Boland and included numerous individuals from an array of practice groups, including James A. Copeland (restructuring), Julie Goodrich Harrison (restructuring), Steve A. Peirce (restructuring), Maria Mokrzycka (restructuring), Bob Bruner (restructuring), Jason Blanchard (restructuring), Paul Trahan (litigation), Emily Wolf (litigation), Josh Agrons (corporate finance), Ryan Searfoorce (corporate finance), Geren Brown (corporate finance), Ryan Graham (corporate finance), Eric Tashman (public finance), Arthur Kimball-Stanley (public finance), J.J. Tang (finance), Jonathan S. Franklin (appellate) and David Kearns (appellate), among many others.

O'Melveny & Myers LLP served as co-counsel to Brazos along with the law firms of Eversheds Sutherland (US) LLP, Foley & Lardner LLP and McKool Smith P.C., each of whom served as conflicts and special counsel.

Berkeley Research Group, LLC served as Brazos's financial advisor, and Collet & Associates served as the company's investment banker.