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Debt relief filing by Dallas firm seen as 'highly probable'

The unforeseen has a way of creating a lot of difficulty for people trying to manage their finances. Many individuals in Texas suffered in the most recent recession, often because of circumstances completely outside their control. Others are still feeling the pinch in the form of mounting credit card debt and pressures from creditors.

Very often, the notion of seeking debt relief through bankruptcy is one that gets relegated to the bottom of the list of options when it should be right at the top. Consulting with an experienced bankruptcy attorney to get a clear understanding of the possibilities is the last thing individuals consider doing when it should be the first.

It might be useful to consider that the pursuit of debt relief is not something that is the unique domain of individuals. As readers likely know well, corporations take advantage of bankruptcy in its various forms. Sometimes the filing is done to sunset a business. Sometimes the goal is to simply restructure debt so that a business can keep going.

That's what seems to be in the offing for Dallas-based Energy Future Holdings. There has been talk for months that the company has been trying to renegotiate terms with creditors in order to get out from under an estimated debt burden of $41 billion.

This week, the Moody's analytics firm speculated that there's a "high probability" that EFH is going to file for bankruptcy before the end of this year. If that happens, it would rank as one of the largest corporate debt relief bankruptcies in the country in more than 30 years; on a par with WorldCom Inc. and Enron.

According to analysts, the company got swamped with debt in part because of a leveraged buyout in 2007. Apparently investors behind that deal were anticipating big returns on high natural gas prices. But prices tumbled as fracking development burgeoned and natural gas supplies shot up.

Industry observers say that a bankruptcy filing would allow the company to shed its debt. Investors, meanwhile, would get back only about half what they put in.

Source: Dallas Business Journal, "Energy Future Holdings bankruptcy would rank among biggest in decades," Nicholas Sakelaris, Sept. 9, 2013

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