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Moody’s: Energy Future Holdings bankruptcy likely by year’s end

By: James Osborne |

Credit ratings agency Moody’s is projecting troubled North Texas electricity giant Energy Future Holdings will enter into bankruptcy by the end of the year.

In a report released Monday, the agency said the arm of the company that controls TXU Energy and Luminant was worth only $15 billion, about half the money it owes to creditors. Analysts there are projecting those companies would be at the center of any bankruptcy proceeding and left open the possibility that the parent company and the arm that controls Oncor could be spared.

“But recent announcements by EFH suggest all options are viable,” Moody’s wrote. “Regardless of which entities file, we think the restructuring will be relatively amenable and organized.”

A filing by Enery Future would rank among the top ten largest non-financial corporate bankruptcies in the United States since 1980, according to Moody’s. Analysts there expect creditors to only recover half of their money, with senior lenders expected to come out on top.

“EFIH”s and Texas Competitive”s senior-secured first-lien lenders would fare the best, while the senior-unsecured lenders at both Texas Competitive and EFH would be pretty much wiped out,” the report read.