Computershare Trust Co. v. Energy Future Intermediate Holding Co. (In re Energy Future Holdings Corp.)
539 B.R. 723
Bankr. D. Del.2015Background
- EFIH issued second-lien notes (11% 2021 and 11.75% 2022) secured solely by equity in Oncor; Computershare serves as Second Lien Trustee and filed proofs of claim.
- Debtors (including EFIH) filed chapter 11; the notes were automatically accelerated upon filing.
- EFIH obtained DIP financing and used remaining DIP funds to make a $750 million partial paydown of the Second Lien Notes (the "Partial Paydown").
- Second Lien Trustee sued, seeking the make-whole/prepayment premium (the "Applicable Premium") allegedly triggered by the Partial Paydown and declaratory relief that future pre-Call Date paydowns would give rise to secured make-whole claims.
- The court previously ruled in related First Lien proceedings that bankruptcy-induced acceleration prevents a prepayment/make-whole unless the indenture unmistakably requires payment after acceleration.
- The parties cross-moved for summary judgment; the court addressed whether the Second Lien Indenture’s phrase "premium, if any" in §6.02 requires a make-whole payment upon automatic acceleration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a make-whole (Applicable Premium) is due after automatic acceleration and the Partial Paydown | The phrase "premium, if any" in §6.02 means a premium is payable upon acceleration and thus the Partial Paydown triggered the Applicable Premium | Acceleration moves the maturity date so post-acceleration payments are not prepayments; "premium, if any" is not the explicit, specific language New York law requires to make a make-whole payable after acceleration | Court held no Applicable Premium was due: post-acceleration payment is not a prepayment and §6.02 lacks the explicit language needed to obligate payment of a make-whole after acceleration |
| Whether the additional words "premium, if any" in the Second Lien Indenture distinguish this case from its First Lien ruling and compel a different result | The nine-word addition makes the Second Lien Indenture distinct from the First Lien Indenture and creates a post-acceleration make-whole right | The language is ambiguous at best, plays a "catch-all" role, and is insufficiently explicit under controlling New York precedent | Court rejected the distinction, adopting Momentive and related authority: "premium, if any" is not specific enough to impose a make-whole after acceleration |
| Whether contract interpretation requires extrinsic evidence or raises material fact issues | Trustee implied interpretation questions exist that could favor extrinsic evidence | EFIH argued the indenture is complete and unambiguous so interpretation is a matter of law | Court found the indenture unambiguous and resolved the issues as legal questions on summary judgment |
| Whether other counts (fees/expenses; interest-on-interest) survive summary judgment | Trustee sought various ancillary recoveries along with the Applicable Premium | EFIH did not move on fees/interest-on-interest | Court granted summary judgment to EFIH on counts seeking Applicable Premium and related counts mirroring First Lien rulings; Counts on trustee fees/expenses and interest-on-interest survived |
Key Cases Cited
- Delaware Trust Co. v. Energy Future Intermediate Holding Co. LLC, 527 B.R. 178 (Bankr. D. Del. 2015) (prior First Lien make‑whole ruling interpreting similar indenture language)
- Delaware Trust Co. v. Energy Future Intermediate Holding Co. LLC, 533 B.R. 106 (Bankr. D. Del. 2015) (further findings in First Lien make‑whole litigation)
- In re MPM Silicones, LLC, 531 B.R. 321 (S.D.N.Y. 2015) ("Momentive") ("premium, if any" held insufficient to create post-acceleration make-whole)
- In re Solutia Inc., 379 B.R. 473 (Bankr. S.D.N.Y. 2007) ("if any" language insufficiently explicit for post-acceleration yield-maintenance)
- U.S. Bank Trust N.A. v. American Airlines, Inc. (In re AMR Corp.), 485 B.R. 279 (Bankr. S.D.N.Y. 2012) (discussing explicitness required for post-acceleration make-whole)
- United Merchants & Mfrs., Inc. v. Equitable Life Assurance Soc. (In re United Merchants & Mfrs.), 674 F.2d 134 (2d Cir. 1982) (liquidated‑damages style prepayment charge enforceable where the agreement specifically ties the default claim to a calculable prepayment charge)