Gov. Gray Davis’ proposed $2.9 billion bailout plan for Southern California Edison hasn’t gone over too well so far. But it may not matter.
Frank Zerunyan, a member of Sulmeyer Kupetz Baumann & Rothman in Los Angeles, predicts that even if the governor’s plan gets passed by state legislators, it wouldn’t be enough to pay back Edison’s various creditors.
As a result, those creditors are expected to either file a slew of lawsuits against Edison or band together and file a petition to put the company into involuntary bankruptcy.
“If the package passes, it depends on what it provides for and how it affects larger facilities or bondholders,” said Zerunyan, who would represent Los Angeles County if Edison goes into bankruptcy. “If those folks don’t like it, they will file an involuntary bankruptcy against Edison.”
So far, creditors haven’t been too hot on the governor’s plan because it’s about $1 billion short of Edison’s total debt.
Even a buyout of Edison may not keep it out of bankruptcy, despite recent interest in the prospect, such as the Aug. 24 offer by City Light & Power Inc.
“If the buyer wants to pay all (Edison’s) debts in full, bankruptcy is not necessary and everyone is happier,” Zerunyan said. “But I don’t predict a buyer out there will want to pay such a premium for Edison.”
,Amanda Bronstad
Los Angeles Business Journal
