I sincerely believe Calpine will go through Chapter 7 liquidation. Once they write down the value of the plants, the lawyers burn up millions fighting about all of it, the contracts are cancelled (more claims against the estate), etc., etc. -- they're going to face Chapter 7 because the second lien debtholders seem to be that hard core in this particular case.
It seems to have become an either/or situation. Almost certainly, the equity is going to be worth absolutely zero. What a sad, sad situation.
Chapter 7 would kill the "success" fee. What a joke.
"On Tuesday Calpine said it would pay Robert May $1.5 million a year, plus bonuses that could reach $3 million a year, as well as a $12 million "success fee" if the bankruptcy court confirms a reorganization plan while May is CEO or within 12 months of his leaving."
Concur that Calpine will fight to establish a viable reorganization plan. Challenge will be to ward off the accounting write-down of leading-edge plants and facilities. While the debt structure is far more complicated, Mirant (and the astute Bankruptcy Judge) serves as an enviable example.
Any word yet on the establishment of a Shareholder Committee? Book value is >$6/share...with Calpine's energy business FINALLY beginning to turn the corner to one-day profitability. As I recall, former CEO/CFO emphasized that he would personally lead the shareholder's fight in bankruptcy court.
Interesting thought. The creditors will gamble on a sale of the assets rather than control of a reorged Calpine? Of course they do say the debt structure is beyond complex. Makes me glad to holding MIRKQ. They always had the better business case.