COLUMBIA GAS COMPANIES FILE CHAPTER 11 PLANS

Columbia Gas System Inc. (CGS), Wilmington, Del., and its main pipeline subsidiary Columbia Gas Transmission Corp. (CGT) have filed separate Chapter 11 reorganization plans. Involved in plans filed with the U.S. Bankruptcy Court in Delaware are CGS's proposed distributions totaling about $3.6 billion to creditors. The sum includes $2.3 billion to pay debt and $1.1 billion in interest on that debt.

April 24, 1995

3 min read

Columbia Gas System Inc. (CGS), Wilmington, Del., and its main pipeline subsidiary Columbia Gas Transmission Corp. (CGT) have filed separate Chapter 11 reorganization plans.

Involved in plans filed with the U.S. Bankruptcy Court in Delaware are CGS's proposed distributions totaling about $3.6 billion to creditors. The sum includes $2.3 billion to pay debt and $1.1 billion in interest on that debt.

CGT's filing amends a plan it filed Jan. 18, 1994 (OGJ, Jan. 24, 1994, Newsletter) that calls for total distribution of about $3.9 billion to its creditors. That sum includes about $2.2 billion to CGS to resolve the parent's secured and unsecured debt claims, $1.2 billion to resolve producer claims, and $300 million to resolve other third party claims.

The two companies, which have been operating as debtors in possession since July 31, 1991, also asked the court to extend their deadlines for filing plans to Oct. 16 and for soliciting acceptances to Dec. 18. Distributions under the two plans are expected to occur before Dec. 31.

The plans include terms of an agreement in principle with almost all of CGT's major producer creditors and a settlement with its firm service customers.

The producer agreement, to be filed with the court last week, represents more than 80% of the $1.2 billion CGT's reorganization plan proposes to distribute to producer creditors to resolve all producer claims. The producer agreement requires the court to approve claim settlements by Oct. 27, 1995. Distributions under the plan are to occur by June 28, 1996.

CGT's plan also calls for a major settlement between CGT and its firm service customers that covers many Federal Energy Regulatory Commission Order 636 transition cost, rate, and bankruptcy matters. CGT was to file the settlement with FERC last week.

In addition to court and FERC approvals, the companies' plans requires approval from shareholders and the Securities and Exchange Commission.

The companies believe all regulatory, judicial, creditor, and shareholder approvals can occur before yearend.

CGS and CGT in 1991 filed for protection under Chapter 11 of the U.S. federal bankruptcy code after getting caught in a squeeze between plunging spot market gas prices and high costs of purchased gas under take or pay contracts with producers (OGJ, Aug. 12, 1991, p. 41). CGS later that year sold its Canadian and liquefied natural gas units for more than $200 million (OGJ, Dec. 9, 1991, p. 30).