CPNLQ (1.69) Calpine Urges Court To Keep Consutling Firm On Ch 11 Case
Friday, October 05 2007 12:39 PM, EST Dow Jones & Company, Inc. "DJNS Original Stories "
Calpine Corp. (CPNLQ) says an energy consultant it tapped to serve as an interim executive has resigned from that role, eliminating any potential conflict that would justify disqualifying his consulting firm from working on the power company's Chapter 11 case.
Calpine says PA Consulting Group Inc.'s Todd Filsinger, who was tapped in August to serve as Calpine's interim executive vice president of commercial operations, never had an employment agreement with Calpine and had "no arrangement to receive a salary, bonus, or any health of other benefits from Calpine."
The energy giant is urging the U.S. Bankruptcy Court in Manhattan to allow the consulting firm to continue working on its Chapter 11 case, saying PA Consulting plays a "vital and continuing" role in the company's restructuring. The committee representing Calpine's unsecured creditors is backing the company, saying disqualifying the firm would disrupt Calpine's efforts to exit bankruptcy protection by the end of January, when the company's "very valuable" exit- financing expires.
Calpine's shareholders last month asked the court to disqualify PA Consulting from serving as the company's energy consultant, saying Filsinger had a "clear conflict of interest" after he was appointed to serve in the vice president role. The U.S. Trustee, the federal government official charged with monitoring the bankruptcy case, also sought to have the firm disqualified.
The official shareholders committee said Filsinger couldn't give the company independent, unbiased advice as a consultant while serving as a Calpine executive. "An actual, economic conflict of interest exists between these two positions," the committee said in court papers filed last month.
Calpine, however, said Filsinger resigned from the vice president position on Sept. 20 , only 27 days after he took on the role while the company searched for a permanent replacement for Thomas N. May, who resigned in August. PA Consulting, which was paid by Calpine for Filsinger's services as executive vice president, agreed to waive all fees billed for his service in the position.
Calpine, which claims its decision to tap Filsinger to serve as interim executive vice president was "completely transparent," says his resignation from the executive role removes any justification for disqualifying his firm.
The company said disqualifying PA Consulting at this point in the Chapter 11 case will "severely diminish any chance of an orderly emergence on the current timetable."
"Simply put, the prejudice to the estate caused by the potential loss of Mr. Filsinger and PA far outweighs the unidentified harm allegedly resulting from Mr. Filsinger's 27-day stint as interim (executive vice president)," Calpine said.
A court hearing on the shareholder committee's request to disqualify the firm is scheduled for Wednesday.
Calpine, based in San Jose , filed for Chapter 11 protection in December 2005 to restructure more than $22 billion in debt. The company, which supplies electricity to 27 million U.S. households, operates low-carbon, natural-gas- fired power plants.
-Marie Beaudette, Dow Jones Newswires; 202-862-1354; marie.beaudette@ dowjones.com
(END) Dow Jones Newswires
10-05-07 1240ET
Copyright (c) 2007 Dow Jones & Company, Inc.
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