Cajun Electric Cooperative has lost its request with the Fifth Circuit Court of Appeals for an emergency stay of the appointment of a trustee in bankruptcy. Cajun had claimed a conflict of interest because the proposed trustee, Ralph Maybe, belongs to the Salt Lake City law office of LeBoeuf, Lamb, Greene & McRae, which worked for Entergy and Gulf States Utilities Co. (GSU) on matters concerning the River Bend nuclear plant. Entergy and GSU have been involved in a $2-billion lawsuit with Cajun over the plant since 1989.
U.S. District Judge Frank Polozola has set Maybe's appointment for hearing. Meanwhile, although the Fifth Circuit denied the emergency stay, it had scheduled an expedited hearing on September 25 on whether to appoint any trustee. Cajun would prefer to reorganize itself (the trustee would have authority to displace its board of directors); however, if a trustee is mandated, Cajun would accept Maybe.
But Claiborne Electric Power Cooperative, one of Cajun's 12 distribution members, argues that the potential conflict should bar Maybe. Jerry Williams, general manager of Claiborne and member of the Cajun board, notes that Maybe's disclosure affidavit lists LeBoeuf, Lamb clients General Electric and the Rural Utilities Service, both of which are involved in the bankruptcy settlement discussions, as well as Babcock and Wilcox, which constructed River Bend. Williams also points out that LeBeoef, Lamb bills Entergy over $1 million in legal fees a year.
Former Energy Secretary Don Hodel, who was interviewed for the trustee position but lost out to Maybe, warns that Cajun may simply be liquidated. He suggests that "serious consideration ought to be given to improving the value of Cajun." Hodel says his discussions with William Clagett, former administrator of the Western Area Power Authority, led them to agree that increased values over liquidation values in the range of $500 million to $1 billion are possible. A "remote possibility" exists "to keep Cajun alive" and substantially repay the bulk of money owed to RUS, Hodel suggests.
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