FORT LAUDERDALE, Fla.,
April 21, 2021 /PRNewswire/
-- Liberty Power Holdings LLC ("Liberty" or the "Company"), a
national retail electric supply company, today announced that it
filed a voluntary petition for reorganization under Chapter 11 in
the U.S. Bankruptcy Court for the Southern District of Florida.
The impact of the February extreme weather event in Texas was sudden and dramatic, causing an
abrupt spike in wholesale costs of serving Electric Reliability
Council of Texas (ERCOT) customers
due to unprecedented market prices for energy and ancillary
services, as widely reported in the press and discussed in state
legislature hearings throughout February and March. Liberty
was able to provide service to its customers during this period.
Liberty took immediate actions to prioritize services to customers,
reduce non-essential spending and preserve liquidity. Liberty's
business outside of ERCOT in northeastern and Midwest U.S. markets
was not impacted and remains robust. However, Liberty was forced to
pay for the full costs of energy provided to Texas customers in order to maintain ongoing
operations, and this large payment necessitated today's action. The
financial reorganization will provide Liberty a path toward a more
robust financial structure that best positions the Company for the
future as it navigates what could be a prolonged process of cost
recovery.
Liberty Remains Open and Serving Customers
Liberty operates in over fourteen states and the District of Columbia and serves over 330,000
retail customer equivalents. All sales contracts and customer
programs are expected to continue as usual. Customers can count on
the same high level of service and reliability. "We thank all of
our customers and employees for their continued dedication to our
company and their passion for meeting and exceeding our customers'
expectations.", said Bob Butler,
Chief Restructuring Officer of Liberty. "We look forward to
emerging from Chapter 11 as a stronger company."
Dramatic Impacts from Weather Event on ERCOT Market
Every day, Liberty seeks to educate customers about their
ability to choose an energy supplier by offering service in over 14
states encompassing over 50 utility territories. Liberty Power is here to help its customers
navigate volatile energy markets. However the events of
February 10th to
20th in which approximately 40% of available power
generation failed to perform, the power grid nearly collapsed, and
ERCOT set wholesale energy and ancillary services prices at
stratospheric and unprecedented levels created a 'perfect
storm' of conditions that were impossible for Liberty and other
market participants to anticipate or prepare for. Many other retail
electric providers, municipalities and cooperatives have suffered
similarly to Liberty and are facing similar financial challenges as
a result of this situation.
"Today's action will protect the value of our business, allow us
to continue our operations and serve our customers, and provide the
time to put in place a new, stronger financial foundation to move
successfully through the fallout of the Texas weather event and to better position us
for the future." said Bob Butler.
"Our loyal customers have made us one of the industry's well-known
brands, and we look forward to serving them now and in the
future."
First Day Motions
As part of the reorganization process, the Company is in the
process of filing customary "First Day" motions, which we expect
will be approved and will allow it to maintain operations in the
ordinary course. Liberty intends to continue to provide the same
products & services and competitive pricing and intends to
continue to pay vendors and suppliers under customary terms for
goods and services received on or after the filing date.
Sufficient Cash to Support Operations
As of the filing date, the Company had adequate cash on hand and
has received a commitment for debtor-in-possession ("DIP")
financing. Following Court approval, this financing, combined with
cash flow generated by the Company's ongoing operations, is
expected to be sufficient to meet Liberty's operational and
restructuring needs. As part of the DIP commitment, Liberty will
explore additional opportunities to maximize value, including a
third-party sale process.
Strong Upward Trajectory
Liberty was on a strong upward financial trajectory prior to the
Texas extreme weather event,
including consecutive quarters of EBITDA improvement. The financial
impact of the Texas weather event,
however, necessitated restructuring actions.
Taking Actions in Response to Texas Extreme Weather Event and
ERCOT market failure
When the effects of the ERCOT crisis began to manifest in
February, the Company moved quickly to adjust. Liberty took action
to closely manage overhead and operating costs. Liberty filed a
petition with the Public Utility Commission of Texas ("PUCT") requesting emergency relief and
joined the Coalition of Competitive Retail Electric Providers
petition to the PUCT requesting emergency action. These
petitions remain pending at the PUCT. Liberty will continue to
pursue these remedies but are uncertain of any relief that may be
forthcoming.
ABOUT LIBERTY POWER
Established in 2001 and headquartered in Fort Lauderdale, Florida, Liberty Power is one of the largest and longest
tenured owner-operated retail electricity provider in the United States. Liberty Power provides large and small
businesses, government agencies and residential customers with
competitively-priced electricity, sustainability solutions and
exceptional customer service.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within
the meaning of federal securities laws. Words such as "expect" and
"intend" and similar expressions identify forward-looking
statements, which include but are not limited to statements related
to our liquidity, the expected effects on our business, financial
condition and results of operations due to the spread of the
COVID-19 virus, the bankruptcy process, the Company's ability to
obtain approval from the Bankruptcy Court with respect to motions
or other requests made to the Bankruptcy Court throughout the
course of the Chapter 11 case, the effects of the Chapter 11 case,
including increased professional costs, on the Company's liquidity,
results of operations and business, the effects of Chapter 11 on
the interests of various constituents and the ability to negotiate,
develop, confirm and consummate a plan of reorganization. We
caution you that these statements are not guarantees of future
performance and are subject to numerous evolving risks and
uncertainties that we may not be able to accurately predict or
assess. We caution you not to place undue reliance on our
forward-looking statements, which speak only as of the date of this
filing, and we undertake no obligation to update this
information.
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SOURCE Liberty Power Holdings
