Texas power giant Energy Future Holdings Corp. (EFH) is no stranger to superlatives. Eight years ago, the buyout that created EFH from the former TXU Corp. was the largest LBO ever. And when it filed for Chapter 11 with more than $45 billion in liabilities last year, it was the year’s largest corporate bankruptcy (and the eighth-largest ever).
Or was that two bankruptcies? Though there was only one filing, Kirkland & Ellis finance expert Linda Myers, whom EFH had brought on months before, had to negotiate funding terms—known as a debtor in possession, or DIP, financing—for EFH’s two distinct business lines. The first, Texas Competitive Electric Holdings, a power conglomerate, was an easy sell: New loans could be secured by bricks-and-mortar plants, real estate and other assets of an operating business. The second DIP, for Energy Future Intermediate Holding Company (EFIH), would be harder: Its main asset was an equity interest in a transmission utility, Oncor Electric Delivery Holdings.
