Just Energy Group, a retail energy provider specializing in electricity and natural gas commodities, sought and received creditor protection via an initial order under the Companies’ Creditors Arrangement Act from the Ontario Superior Court of Justice and is seeking similar protection under Chapter 15 of the Bankruptcy Code in the United States. Just Energy also reached an agreement with one of its term loan lenders for a $125 million debtor-in-possession financing. The company’s largest commodity suppliers also agreed to continue to support the company with commodity supply and ISO services.
The filings, and associated $125 million DIP financing, will enable Just Energy to continue all operations without interruption throughout the U.S. and Canada, to continue making payments required by ERCOT and to satisfy other regulatory obligations. Just Energy sought and received a stay of proceedings and other protections provided by the CCAA in order to provide the company with breathing room to pursue alternatives that would allow it to emerge as a stable business. The stay of proceedings has an initial term of 10 days, subject to extension as the court deems appropriate. The filings have no impact on customer bills.
According to Just Energy, the filings are the result of unprecedented cold weather in Texas in February and the more than $250 million in corresponding charges from ERCOT, which Just Energy must pay in the near term. The total financial impact may change due to ERCOT resettlements, potential orders of the Public Utility Commission with respect to recommendations of the Independent Market Monitor, the outcome of the dispute resolution process initiated by the company with ERCOT and potential litigation challenges. Since these disputes are still pending and not resolved, Just Energy would be unable to pay the full amounts when due to ERCOT without the arrangement of the DIP financing.
BMO Capital Markets has been engaged as financial advisor; Osler, Hoskin & Harcourt and Fasken Martineau DuMoulin are legal advisors in Canada; Kirkland & Ellis and Jackson Walker are legal advisors in the United States; and FTI Consulting Canada has consented to act as the monitor under the CCAA.