Liberty Power Holdings, an electricity retailer with customers in 14 states and Washington DC, filed for bankruptcy in Florida after a record-setting mid-February freeze in Texas produced crippling losses from price spikes.
The move comes after Liberty’s parent -- Liberty Power Corp LLC -- on Sunday unexpectedly fired all of its more than 80 employees. The now-bankrupt subsidiary relied on its parent to operate the business, so the firings put “the entire business operation and going concern value of the debtor in serious jeopardy,” Chief Restructuring Officer Bob Butler wrote in a court declaration.
Liberty Power Holdings said in a statement Wednesday that it is continuing to operate and serve customers. The company will explore selling itself in bankruptcy, according to the statement. Chapter 11 bankruptcy allows firms to keep operating while working on a plan to repay creditors.
The Fort Lauderdale, Florida-based company joins a growing list of firms thrown into financial straits from the cold Texas blast that left millions without power and killed more than 100 people. It follows Griddy Energy LLC, which exposed consumers to accelerating power prices and quickly went out of business, and Brilliant Energy LLC, which filed for liquidation in March.
At their peak, the unprecedented outages left 4 million homes and businesses without heat, light and in some cases water as the powerful winter storm gripped the region, causing as much as $129 billion in economic losses.
For Liberty, sky-high Texas electricity prices led to a bill from the state’s grid operator that the company wasn’t able to pay, Butler said in the court declaration. It owes more than $80 million to Boston Energy Trading and Marketing LLC, which provides credit to Liberty so it can make transactions in power markets. The state’s power market is facing a $3 billion shortfall due to underpayments from more than a dozen companies.
Liberty Power was founded by David Hernandez and Alberto Daire in 2001, according to its website. Hernandez was a finance manager at Enron for two years before becoming chief executive officer of the retailer, according to his LinkedIn profile. He previously worked at Nortel Networks along with Daire, according to their profiles.
The case is Liberty Power Holdings LLC, 21-13797, U.S. Bankruptcy Court, Southern District of Florida (Fort Lauderdale).
(Updates with additional reporting throughout.)
--With assistance from Nicole Bullock.
To contact the reporters on this story:
Dawn McCarty in Wilmington, Delaware at email@example.com;
Jeremy Hill in New York at firstname.lastname@example.org
To contact the editors responsible for this story:
Claire Boston at email@example.com
© 2021 Bloomberg L.P. All rights reserved. Used with permission.