— Bloomberg’s Richard Bravo and Mark Chediak have a nice story on how the private equity firms that have the old Texas Utilities buckling under $50 billion worth of debt that has made it technically insolvent. So why haven’t KKR, Goldman Sachs, and TPG put it in bankruptcy protection? There are fees to be made, at least $528 million so far:

“This is a utility and its product is electricity that it sells to the public, but it really is a debt house,” said Tom Sanzillo, finance director for the Institute for Energy Economics & Financial Analysis, a research group, and former deputy comptroller of New York who oversaw the state’s $156 billion pension fund. “There are fees to be made in all that debt management”…

The fees from Energy Future may allow KKR, TPG and Goldman Sachs to extract cash without infringing on the Delaware Limited Liability Company Act, which limits distributions from a firm if all its liabilities exceed the fair value of its assets, according to Chapter 18 of the law.


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.