Case Doc 680 Filed 04/15/13 Entered 04/15/13 19:58:46 Desc Main Document Page 1 of 21

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1 Document Page 1 of 21 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: Chapter 11 EDISON MISSION ENERGY, et al., 1 Case No (JPC Debtors. (Jointly Administered NOTICE OF DEBTORS MOTION TO EXTEND THEIR EXCLUSIVE PERIODS TO FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF PLEASE TAKE NOTICE that on the 15th day of May, 2013, at 10:30 a.m. (Central Time or as soon thereafter as counsel may be heard, the Debtors shall appear before the Honorable Bankruptcy Judge Jacqueline P. Cox or any other judge who may be sitting in her place and stead, in Courtroom 680 in the United States Courthouse, 219 South Dearborn Street, Chicago, Illinois, and present the attached Debtors Motion to Extend Their Exclusive Periods to File a Chapter 11 Plan and Solicit Acceptances Thereof (the Motion. PLEASE TAKE FURTHER NOTICE that any objection to the Motion must be filed with the Court by May 8, 2013, at 4:00 p.m. (Central Time and served by such time on (a counsel to the Debtors; (b the Office of the U.S. Trustee for the Northern District of Illinois; (c members of and counsel to the official committee of unsecured creditors appointed to these chapter 11 cases; (d the indenture trustee for the Debtors senior unsecured notes; (e counsel to the ad hoc committee of certain holders of the Debtors senior unsecured notes; (f the indenture trustee for the lessor notes related to the Debtors Powerton generating station in Pekin, Illinois, and units 7 and 8 of the Debtors Joliet, Illinois, generating station and the pass-through trustee for the related pass-through certificates; (g counsel to the ad hoc committee of certain holders of pass-through certificates related to the Debtors Powerton and Joliet generating stations; (h the owner trusts and the equity investors for the Debtors Powerton and Joliet generating stations (and their respective counsel, if known; (i the lender under Debtor Edison Mission Energy s letter-of-credit facility; (j the state attorneys general for states in which the Debtors conduct business; (k United States Attorney for the Northern District of Illinois; (l the Internal Revenue 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: Edison Mission Energy (1807; Camino Energy Company (2601; Chestnut Ridge Energy Company (6590; Edison Mission Energy Fuel Services, LLC (4630; Edison Mission Fuel Resources, Inc. (3014; Edison Mission Fuel Transportation, Inc. (3012; Edison Mission Holdings Co. (6940; Edison Mission Midwest Holdings Co. (6553; Midwest Finance Corp. (9350; Midwest Generation EME, LLC (1760; Midwest Generation, LLC (8558; Midwest Generation Procurement Services, LLC (2634; Midwest Peaker Holdings, Inc. (5282; Mission Energy Westside, Inc. (0657; San Joaquin Energy Company (1346; Southern Sierra Energy Company (6754; and Western Sierra Energy Company (1447. The location of parent Debtor Edison Mission Energy s corporate headquarters and the Debtors service address is: 3 MacArthur Place, Suite 100, Santa Ana, California

2 Document Page 2 of 21 Service; (m the Securities and Exchange Commission; (n the Environmental Protection Agency and similar state environmental agencies for states in which the Debtors conduct business; and (o those parties who have requested service of papers in this case pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure and the Order Establishing Certain Notice, Case Management and Administrative Procedures [Docket No. 183]. PLEASE TAKE FURTHER NOTICE that copies of all documents filed in these chapter 11 cases are available free of charge by visiting the case website maintained by GCG, Inc., the Debtors notice and claims agent for these chapter 11 cases, available at or by calling ( You may also obtain copies of any pleadings by visiting the Court s website at in accordance with the procedures and fees set forth therein. Dated: April 15, 2013 /s/ David R. Seligman, P.C. James H.M. Sprayregen, P.C. David R. Seligman, P.C. Sarah Hiltz Seewer KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois Telephone: ( Facsimile: ( and - Joshua A. Sussberg KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York Telephone: ( Facsimile: ( Counsel to the Debtors and Debtors in Possession other than Camino Energy Company - and - David A. Agay Joshua Gadharf MCDONALD HOPKINS LLC 300 North LaSalle Suite 2100 Chicago, Illinois Telephone: ( Facsimile: ( Counsel to Debtor Camino Energy Company and Conflicts Counsel to the other Debtors and Debtors in Possession 2

3 Document Page 3 of 21 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: Chapter 11 EDISON MISSION ENERGY, et al., 1 Case No (JPC Debtors. (Jointly Administered DEBTORS MOTION TO EXTEND THEIR EXCLUSIVE PERIODS TO FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF The above-captioned debtors and debtors in possession (collectively, the Debtors respectfully state the following in support of this motion (this Motion : Introduction 1. The beginning of these chapter 11 cases has been extremely active. 2 From ensuring a soft landing into chapter 11, to maintaining a coordinated internal and external communications program to support ongoing operations and keep all constituents focused and engaged during a period of uncertainty, to setting the stage for the evaluation of strategic alternatives and all potential restructuring opportunities (and creating appropriate employee incentives to align interests for that evaluation process, Edison Mission Energy (together with its Debtor and non-debtor subsidiaries, collectively EME is focused on right-sizing its 1 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: Edison Mission Energy (1807; Camino Energy Company (2601; Chestnut Ridge Energy Company (6590; Edison Mission Energy Fuel Services, LLC (4630; Edison Mission Fuel Resources, Inc. (3014; Edison Mission Fuel Transportation, Inc. (3012; Edison Mission Holdings Co. (6940; Edison Mission Midwest Holdings Co. (6553; Midwest Finance Corp. (9350; Midwest Generation EME, LLC (1760; Midwest Generation, LLC (8558; Midwest Generation Procurement Services, LLC (2634; Midwest Peaker Holdings, Inc. (5282; Mission Energy Westside, Inc. (0657; San Joaquin Energy Company (1346; Southern Sierra Energy Company (6754; and Western Sierra Energy Company (1447. The location of parent Debtor Edison Mission Energy s corporate headquarters and the Debtors service address is: 3 MacArthur Place, Suite 100, Santa Ana, California See Debtors First Status Report on Chapter 11 Cases [Docket No. 604] (the Status Report.

4 Document Page 4 of 21 balance sheet and streamlining its operations through the tools afforded under the Bankruptcy Code. 3 At the same time, and as the Status Report detailed, many of the Debtors restructuringrelated initiatives from strategic considerations relating to Midwest Generation, LLC ( MWG, to various regulatory actions are still at their inception stages and require careful consideration and analysis. 2. In addition, and in close coordination with the Committee and a group of certain holders of Edison Mission Energy s senior unsecured notes (the Noteholder Group, the Debtors continue to analyze and pursue the settlement contemplated in that certain Transaction Support Agreement, dated December 16, 2012 (the TSA, between and among EME, Edison International ( EIX, and the members of the Noteholder Group. The transaction to be effectuated pursuant to the TSA is subject to an ongoing investigation by the Debtors in consultation with their major stakeholders to determine whether in fact to move forward with the settlement. 4 Importantly, if the Court approves the Debtors entry into the TSA, EME will likely remain consolidated with EIX through as late as December 31, 2014, to recognize benefits under certain tax sharing arrangements with EIX, requiring exclusivity to be maintained consistent with a two-year stay in chapter The Debtors initial 120-day Exclusive Filing Period is scheduled to expire on April 16, The initial 180-day Exclusive Solicitation Period expires on June 15, An Capitalized terms used but not defined in this introduction have the meanings ascribed to them later in this Motion. See Status Report, Section III.C. See TSA 7(j, 8(j (entry of an order terminating the Debtors exclusivity is a termination right for each of EIX and the Noteholder Group. Pursuant to the case management procedures approved by the Court in these chapter 11 cases, the filing of this Motion automatically extends the Debtors exclusive period to file a chapter 11 plan until the Court considers and rules upon this Motion. See Order Approving Case Management Procedures [Docket No. 128] Ex

5 Document Page 5 of 21 extension of the Debtors Exclusive Periods is necessary and warranted. Simply put, the facts and circumstances of these chapter 11 cases including the potential settlement with EIX and the various milestones included therein, all of which must be achieved before a chapter 11 plan could even be proffered suggest that a long-term extension of the Exclusive Periods is appropriate to allow for the completion of the investigation and the consideration of all strategic alternatives available to the Debtors before commencing a plan process. 4. Thus, the Debtors seek a 10-month extension of the Exclusive Periods to continue to evaluate restructuring initiatives at this infant stage of these chapter 11 cases and at the same time begin to move forward, hand in hand with their major creditor constituencies, on a path to maximize the value of the Debtors estates. The Debtors submit that all parties will be best served by an extension of the Exclusive Periods, which will avoid needless distraction and provide the appropriate environment for the major stakeholders in these chapter 11 cases to work collaboratively toward a value-maximizing restructuring. To that end, a meaningful extension of the Exclusive Periods as opposed to piecemeal or incremental extensions will ensure that all parties in interest can focus on the more important elements of these chapter 11 cases and work collaboratively to achieve the common goal of maximizing value. Relief Requested 5. The Debtors seek entry of an order, substantially in the form attached hereto as Exhibit A, extending the Debtors exclusive periods to file a chapter 11 plan and to solicit votes for the plan by 10 months. More specifically, the Debtors seek to extend the exclusive period (a to file a chapter 11 plan for each Debtor (the Exclusive Filing Period through and including February 18, 2014, and (b to solicit acceptances of a chapter 11 plan of each Debtor 5

6 Document Page 6 of 21 (the Exclusive Solicitation Period and, together with the Exclusive Filing Period, the Exclusive Periods through and including April 15, Jurisdiction 6. The United States Bankruptcy Court for the Northern District of Illinois (the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and This matter is a core proceeding within the meaning of 28 U.S.C. 157(b(2. 7. Venue is proper pursuant to 28 U.S.C and The statutory basis for the relief requested herein is section 1121 of title 11 of the United States Code (the Bankruptcy Code. Background 9. EME, together with its Debtor and non-debtor affiliates, is a leading independent power producing enterprise specializing in developing, operating, and selling energy and capacity from approximately 40 generating facilities in 12 states and the Republic of Turkey. The Debtors have approximately 950 employees and maintain headquarters in Chicago, Illinois and Santa Ana, California. 10. On December 17, 2012 (the Petition Date, each of the Debtors filed a petition with this Court under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a and 1108 of the Bankruptcy Code. On December 18, 2012, the Court entered an order [Docket No. 115] approving procedural consolidation and joint administration of these chapter 11 cases pursuant to Bankruptcy Rule 1015(b (as amended by the Court s order entered on December 21, 7 The exclusivity extensions requested herein do not implicate either the 18-month or 20-month limitations set forth in section 1121(d(2 of the Bankruptcy Code. The Debtors request for an extension of the Exclusive Periods is made without prejudice to their right to seek further extensions of the Exclusive Periods. 6

7 Document Page 7 of [Docket No. 154]. No party has requested the appointment of a trustee or examiner in these chapter 11 cases. On January 7, 2013, the U.S. Trustee for the Northern District of Illinois appointed an official committee of unsecured creditors (the Committee in these chapter 11 cases [Docket No. 202] (as amended on January 18, 2013 [Docket No. 308]. Basis for Relief 11. The Exclusive Filing Period and the Exclusive Solicitation Period set forth in section 1121(b and (c of the Bankruptcy Code are set to expire absent further order of the Court. 12. Section 1121(d(1 of the Bankruptcy Code permits a court to extend a debtor s exclusivity for cause, subject to certain limitations. Although the Bankruptcy Code does not define cause, caselaw and the statute s legislative history indicate that bankruptcy courts should use their discretion to promote the orderly, consensual, and successful reorganization of a debtor s affairs. See 203 North LaSalle Street P ship v. Bank of Am. Nat l Ass n, No , 1999 WL , at *4 (N.D. Ill. Dec. 13, 1999 ( [T]he Code commits decisions on extending the exclusivity period to the discretion of the bankruptcy court. ; 140 Cong. Rec. H (Oct. 4, 1994 ( Exclusivity is intended to promote an environment in which the debtor s business may be rehabilitated and a consensual plan may be negotiated Courts often balance and apply various of the following factors in deciding whether cause exists to extend (or to terminate a debtor s exclusive periods: a. the size and complexity of the case; b. the need for sufficient time to permit the debtor to negotiate a plan of reorganization and prepare adequate information; c. whether the debtor has made progress in negotiations with its creditors; d. the existence of good faith progress toward reorganization; 7

8 Document Page 8 of 21 e. whether the debtor is seeking to extend exclusivity to pressure creditors to accede to the debtor s reorganization demands; f. whether the debtor has demonstrated reasonable prospects for filing a viable plan; g. the fact that the debtor is paying its bills as they become due; h. the amount of time which has elapsed in the case; and i. whether an unresolved contingency exists. See, e.g., In re Adelphia Comm cns Corp., 336 B.R. 610, 674 (Bankr. S.D.N.Y. 2006; see also In re Highland Park Assocs. Ltd. P ship I, 130 B.R. 55, 60 (Bankr. N.D. Ill (recognizing that complexities of this case warrant an extension and extending exclusivity even when stay prohibiting foreclosure of the debtor s only asset had been lifted; In re Co. Store, Inc., No (TSU, 1992 WL , at *2 3 (Bankr. W.D. Wis. Oct. 5, 1992 (extending exclusive periods after considering size and complexity of the cases, need for more time to prepare disclosure statement and plan of reorganization, debtors good faith through the reorganization, and absence of wrongful coercion of, or prejudice against, creditors. 14. Courts in this circuit recognize that extending a debtor s exclusive periods is especially warranted where doing so will facilitate the debtor s efforts to pursue a consensual reorganization. See In re UNR Indus., Inc., 72 B.R. 789, 792 (Bankr. N.D. Ill (in approving second extension of debtors exclusivity, recognizing that a negotiated, consensual plan of reorganization is the best route to take and that [t]he alternative which might be brought on if the exclusive period were ended could be disastrous ; In re All Seasons Indus., Inc., 121 B.R. 1002, 1006 (Bankr. N.D. Ind ( One of the most important reasons for extending the debtor s period of exclusivity is to give the Chapter 11 process of negotiation and compromise an opportunity to be fulfilled, so that a consensual plan can be proposed and confirmed without opposition.. 8

9 Document Page 9 of Not all factors are relevant to every case and courts tend to use a subset of applicable factors to determine whether cause exists to grant an exclusivity extension in a particular chapter 11 case. See, e.g., In re Express One Int l, Inc., 194 B.R. 98, 100 (Bankr. E.D. Tex (listing all nine factors later set forth in Adelphia, but relying on only four as relevant in determining whether there was cause to extend exclusivity; In re McLean Indus., Inc., 87 B.R. 830, 835 (Bankr. S.D.N.Y (recognizing that maximizing value of tax attributes is further cause for extending exclusivity by holding that the need to determine the optimal way to utilize [the estate s] NOLs supports exclusivity extension; In re United Press Int l, Inc., 60 B.R. 265, 269 (Bankr. D.D.C (finding that debtor showed cause to extend exclusivity based upon showing of three factors later identified by Adelphia: complexity, negotiations with creditors, and progress toward reorganization; In re Pine Run Trust, Inc., 67 B.R. 432, 435 (Bankr. E.D. Pa (relying on two factors later identified by Adelphia reasonable prospects for filing a viable plan and absence of pressure on creditors to accede to the debtor s reorganization demands in holding that cause existed to extend exclusivity. 16. The Debtors submit that cause exists pursuant to section 1121(d to extend the Exclusive Periods by 10 months. In fact, each of the relevant factors weighs heavily in favor of extending the Exclusive Periods. I. The Debtors Chapter 11 Cases are Large and Complex. 17. These chapter 11 cases are extraordinary in both size and complexity. The Debtors with approximately 950 employees include 17 companies and more than 250 non-debtor affiliates engaged in distinct modes of power generation throughout the United States and several other lines of business. EME, through its subsidiaries, owns or operates over 40 power generation projects, including the following: 9

10 Document Page 10 of 21 coal-fired power plants, including MWG s fleet of four generating stations in Illinois and a waste coal facility in West Virginia; natural gas-fired power plants, including nine operating facilities in California, one in Doga, Turkey, and the Walnut Creek Energy Park gas project in southern California (currently in construction and scheduled for completion and full-scale commercial operations in June 2013; and approximately 30 wind facilities in 11 states. Those projects include various complicated financing, partnership, and operational arrangements. In fact, EME s portfolio includes projects with dozens of non-eme partners and 14 significant project financing arrangements related to certain projects owned or operated by EME s non-debtor affiliates. The Debtors have thousands of creditors and including EME s non-debtor affiliates a capital structure that maintains approximately $5.2 billion of unsecured bond and project debt, including complex leveraged lease transactions, along with substantial intercompany obligations. 18. Beyond the complexities of owning and operating a multi-billion dollar, nationwide and international enterprise, EME continues to face the challenges that contributed to the commencement of these chapter 11 cases. State and federal regulatory regimes including Illinois Combined Pollutant Standard ( CPS impose rigorous emissions requirements on coal, affecting the Debtors operations and strategic planning for the MWG coal facilities. 19. In addition, the Debtors face fierce competition, especially as historically high natural gas production and associated low pricing has caused wholesale electricity prices (and EME s resultant revenues to fall. Although the Debtors commencement of these chapter 11 cases provided a stay of the looming debt interest payments and maturities, the environmental compliance requirements and macroeconomic pressures remain. And as a result, the Debtors and their advisors have begun and will continue to address and evaluate all strategic alternatives and potential restructuring opportunities facing their large, complex businesses. 10

11 Document Page 11 of Moreover, the size and complexity of the Debtors enterprise, the regulatory framework in which they operate, and the intense competition they face are not mere stagnant factors but instead constantly change. The Debtors continually update their forecasts depending on the latest electricity, natural gas, coal, and other commodity prices. The Debtors regulatory compliance costs continue to adjust as they achieve certain regulatory compliance relief (discussed below. Thus, it is not merely the Debtors size and complexity, but also the fact that the Debtors business and the environment in which that business operates continues to evolve, that makes these chapter 11 cases complex and challenging. 21. The Debtors also have engaged in discussions with all stakeholder constituencies including, the Committee, the Noteholder Group, EIX, and stakeholders of MWG, as well as other individual creditors. The Debtors have successfully managed the concerns of their various stakeholders such that very few matters have required court intervention. Nonetheless, the Debtors behind-the-scenes administration of these chapter 11 cases (and operation of their businesses is extremely active and complicated. II. The Debtors Have Made Significant Progress Negotiating with Creditors. 22. Importantly, the Debtors and their major creditor constituencies including the Committee and the Noteholder Group have been in close coordination throughout the early stages of these chapter 11 cases. From in-person meetings to near-daily telephone conferences, the Debtors and their advisors have been in regular contact with the Committee and the Noteholder Group on all material matters (including certain matters that have not required or will not require presentation to the Court for approval. 23. The Debtors, the Committee, and the Noteholder Group have worked (and continue to work collaboratively to agree upon a number of matters without having to resort to litigation including, for example, (a the Debtors first day and second day motions and 11

12 Document Page 12 of 21 orders, (b the Debtors incentive and retention plans, including the Debtors long-term incentive plan, 8 (c hedging and energy trading protocols for non-debtor affiliate Edison Mission Marketing and Trading, 9 and (d the Debtors cash management system and related controls. Moreover, the Debtors in close coordination with the Committee and the Noteholder Group continue their investigation related to the restructuring agreement with EIX to determine whether to move forward with the settlement described in the TSA. 10 The Debtors collaboration with their primary creditor constituencies includes the development of litigation and investigation protocols, review of thousands of documents, and complicated tax analyses. 24. The Debtors have also successfully engaged their stakeholders with respect to strategic alternatives and restructuring strategies regarding MWG and the leveraged leases at the Powerton-Joliet coal facilities ( PoJo. 11 The Debtors have engaged in active, constructive discussions with their stakeholders regarding PoJo, including several meetings with the Committee and the Noteholder Group and a series of conferences between the Debtors advisors and advisors to the PoJo equity investors and a group of certain holders of the PoJo pass-through certificates. 12 The Debtors also have engaged and successfully worked with other stakeholders, including co-investors and creditors of certain of EME s project-level subsidiaries, as well as those parties advisors See Status Report, Section III.A; Final Order Authorizing the Debtors to Implement Incentive Plans For Non- Insider Employees [Docket No. 626]; Final Order Authorizing Compensation of Insider Senior Executives Under Employee Incentive Programs [Docket No. 627]. See Status Report, Section III.A; Final Order Authorizing Continued Performance Under Special Trading Contracts [Docket No. 313]. See Status Report, Section III.C. See id. at Section III.B. See Order Authorizing But Not Directing the Debtors to Perform Obligations Under Forbearance Agreement Relating to the PoJo Facilities [Docket No. 122]; Order Authorizing the Debtors to Perform Obligations Under Amended Forbearance Agreement Relating to the PoJo Facilities [Docket No. 630]. 12

13 Document Page 13 of Simply put, although the Debtors and their major stakeholders do not necessarily agree on everything, there can be no complaint that the Debtors are anything less than completely forthcoming in diligence, analysis, and collaboration. III. The Debtors Have Made Good-Faith Progress Toward Reorganization. 26. The Debtors working closely with their major creditor constituencies have begun a strategic review to consider the appropriate path forward that will lead to the maximization of value of the Debtors estates for the benefit of all parties in interest. This analysis requires, among other things, addressing the aforementioned stringent emissions regulations that impact the Debtors coal fleet. Notably, on April 5, 2013, the Illinois Pollution Control Board issued an order granting MWG s request for variance relief from certain CPS restrictions, including with respect to 2015 and 2016 annual average sulfur dioxide rates and a delay until 2015 for certain mandatory environmental upgrades or shutdown and decommissioning requirements. The variance relief, however, is subject to certain conditions. Thus, while obtaining the variance relief is incredibly important to MWG and should provide a substantial benefit to its estate and restructuring prospects, the conditions imposed require further legal and regulatory analysis to assess the true impact of such relief. 27. The Debtors have followed the scheduled milestones set forth in the TSA, including continued good-faith efforts to negotiate and document the final form of a master restructuring agreement (the MRA and certain transition and shared services agreements to effectuate EME s ability to operate as a standalone business. The Debtors also have proceeded in good faith toward the completion of the EIX investigation. Since negotiating and obtaining Court approval of an order permitting the Debtors and the Committee to serve subpoenas on EIX and SCE [Docket No. 339], the Debtors have received over 108,000 documents for review. 13

14 Document Page 14 of 21 Importantly, the master restructuring agreement contemplates EIX and EME remaining consolidated through December 31, The Debtors and their advisors have begun a comprehensive analysis of all of their contractual relationships to mark-to-market the Debtors various costs and expenses for operations and other general or administrative expenses. This analysis, along with the Debtors broader strategic analysis, will continue to require significant legal and operational diligence, time, and input from the Debtors creditor constituencies. 29. To maintain focus on their restructuring initiatives, the Debtors have vigilantly protected their rights to enforce the automatic stay. Most significantly, the Debtors successfully contested Chevron s motions for a preliminary injunction and relief from the automatic stay, 13 and the Debtors continue their litigation efforts in both the Chevron adversary proceeding and the related appeal in the District Court. 14 The Debtors also have sought relief from the Court to enforce or seek appropriate limited relief from the automatic stay for certain union arbitration proceedings, personal injury claims, and alleged environmental matters. In addition, the Debtors have addressed and resolved many real and potential violations of the automatic stay without resorting to Court intervention See Chevron Kern River Co. v. Southern Sierra Energy Co., Adv. Proc. No (JPC (Bankr. N.D. Ill. Dec. 26, 2012 [Adv. Docket No. 39]. Chevron, the Debtors joint venture partner at those two projects, filed an adversary complaint and sought relief from the automatic stay early in the Debtors chapter 11 cases, seeking a declaration that the chapter 11 filing was an event of default that permits Chevron to buy out the Debtors stake in, and expel these Debtors from participating in management of, the applicable gas partnerships. Chevron has sought leave to appeal the Court s denial of the preliminary injunction, while asserting that it may appeal the denial of its request for relief from the automatic stay as of right. See Chevron Kern River Co. v. Southern Sierra Energy Co., No. 1:13-cv (CRN (N.D. Ill. Feb. 4,

15 Document Page 15 of 21 IV. The Debtors Need More Time to Negotiate a Plan of Reorganization and Prepare Adequate Information. 30. At this time, assuming the Debtors continue along the TSA s milestones, the Debtors have until mid-july to obtain court approval of the MRA contemplated in the TSA. If the Court ultimately does in fact approve the MRA, the TSA requires the Debtors to maintain exclusivity. 15 If the Debtors do not seek approval of the MRA or the Court does not approve it, the Debtors will need additional time to formulate a plan of reorganization with an entirely new set of facts on the ground. 31. Beyond the transaction contemplated in the TSA, fundamental aspects of the Debtors chapter 11 cases support an extension of the Debtors exclusivity. In particular, the Debtors continue to analyze their best path forward for the MWG coal assets. Regardless of the outcome of the TSA, the Debtors and their stakeholders including the PoJo equity owners and the holders of approximately $345 million currently outstanding pass-through certificates related to the PoJo leveraged leases need time to analyze the difficulties facing MWG. For 2012, market conditions resulted in an adjusted operating loss of $253 million at the MWG coal plants and, in the coming years, EME has estimated that over $600 million may be required to retrofit its coal-fired power plants to comply with all CPS requirements. Accordingly, the Debtors analysis of MWG representing almost all of EME s coal-fired power generation business is extremely complicated and will continue to demand significant time and resources from the Debtors and their advisors before they begin to formulate a plan of reorganization. 15 See TSA 7(j (entry of an order terminating the Debtors exclusivity is a termination right for EIX; id. 8(j (entry of an order terminating the Debtors exclusivity is a termination right for the Noteholder Group. 15

16 Document Page 16 of The Debtors have obtained Court approval to set June 17, 2013 as the bar date for the filing of claims, 16 after which date the Debtors will begin a claims reconciliation process, which will be critical to understanding the universe of claims ahead of a plan process. V. An Extension of the Exclusive Periods Will Not Prejudice Creditors. 33. The Debtors seek to maintain exclusivity so parties with competing interests do not derail the Debtors efforts to formulate a consensual restructuring that maximizes value for all of the Debtors stakeholders. On the contrary, maintaining exclusivity will afford the Debtors the opportunity to complete their investigation associated with the TSA and preserve the potential benefits and value available thereunder. 17 Maintaining the Debtors exclusivity also fosters the stability that the Debtors already have created following their soft landing into chapter 11. And all stakeholders benefit from continued stability and predictability that comes with engaging the Debtors as the only potential plan proponents rather than multiple unknown parties with potentially diverging interests as they proceed toward a value-maximizing restructuring. Even if the Court approves an extension of the Exclusive Periods, nothing prevents parties in interest from later arguing to the Court that cause supports termination of the Debtors exclusivity. VI. The Debtors Are Paying Their Bills as They Come Due. 34. Since the Petition Date, the Debtors have paid their employees, vendors, and utilities providers in the ordinary course of business or as otherwise provided by Court order. In See Order (A Setting Bar Dates for Filing Proofs of Claim, Including 503(b(9 Proofs of Claim and (B Approving the Form and Matter of Notice Thereof [Docket No. 669]. Notably, EIX and the Noteholder Group are bound to support the Debtors efforts to pursue the settlement transaction set forth in the TSA. See, e.g., TSA 2(g (TSA prohibits EIX from taking any action that is inconsistent with, or that would delay or obstruct the proposal, solicitation, confirmation, or consummation of the proposed settlement transaction; id. 3(e (TSA prohibits each member of the Noteholder Group from taking any action that is inconsistent with, or is intended or is likely to interfere with approval and consummation of, the proposed settlement transaction. 16

17 Document Page 17 of 21 addition, the Debtors have worked diligently to maintain open lines of communication and access to information for those parties in interest that have questions or concerns regarding these chapter 11 cases, fielding hundreds of inquiries on the Debtors restructuring hotline to date. VII. The Debtors Have Demonstrated Reasonable Prospects for Filing a Viable Plan. 35. The Debtors are performing the needed analysis and working through the required milestones set forth in the TSA 18 and its related terms sheets to determine whether to proceed with the settlement transaction which will include, among other things, a chapter 11 plan. Accordingly, the Debtors have already taken steps toward formulating (and thereafter filing a viable plan of reorganization. The Debtors continue to evaluate the TSA and settlement transaction while, at the same time, evaluating all potential alternatives and restructuring opportunities. The Debtors will file and prosecute the best available chapter 11 plan based on the conclusions of these evaluations. VIII. Little Time Has Elapsed in These Chapter 11 Cases. 36. This request for an extension of the Exclusive Periods is the Debtors first and comes just under four months into these chapter 11 cases. As described in the Status Report, the Debtors have made significant strides forward thus far, including the smooth transition of their operations into, and the administration of, these chapter 11 cases. But, as expected given the scope of what must be achieved in these chapter 11 cases, much work remains. The TSA contemplates a two-year chapter 11 process. The Debtors anticipate that, with the requested 10-month extension of the Exclusive Periods, they will continue to make significant progress 18 See TSA 2(f (g, 3(d (e (EIX and members of the Noteholder Group agreed not to support any support any plan or sale process that is inconsistent with the TSA or its term sheets; TSA Ex. A, Equity Term Sheet, at 16 (EIX has committed to support a plan, provided that it is consistent with the terms of the TSA and its related term sheets; TSA Ex. B, Restructuring Term Sheet among the Company and the Consenting Noteholders, at 1 2 (contemplating that transactions in noteholder term sheet will be effectuated... pursuant to a plan of reorganization confirmed in the Debtors voluntary, prearranged chapter 11 cases. 17

18 Document Page 18 of 21 toward completing a consensual restructuring and emerging from chapter 11 with an appropriate capital structure and improved operations. 37. An objective analysis of the relevant factors demonstrates that the Debtors are doing everything that they should be doing as chapter 11 debtors to facilitate a successful reorganization and that more time is necessary to pursue their reorganization. Courts in this and other jurisdictions have often granted similar relief where, as here, the facts and circumstances justify extensions of a debtor s exclusivity. See, e.g., In re Neumann Homes, Inc., No (ERW (Bankr. N.D. Ill. Feb. 20, 2008 (granting five-month initial extension; In re UAL Corp., No (ERW (Bankr. N.D. Ill. Mar. 24, 2003 (granting six-month initial extension; In re Kmart Corp., No (SPS (Bankr. N.D. Ill. Jul. 24, 2002 (upon debtors first request and after initial bridge order extending exclusive period by 77 days, granting additional extension in excess of nine months; In re Calpine Corp., No (BRL (Bankr. S.D.N.Y. Apr. 11, 2006 (granting eight-month initial extension; see also In re Shamrock-Hostmark Andover Hotels, LLC, No (JPC (Bankr. N.D. Ill. Oct. 23, 2012 (granting three-month initial extension; In re Ryan Int l Airlines, Inc., No (MB (Bankr. N.D. Ill. July 9, 2012 (granting three-month initial extension; In re Corus Bankshares, Inc., No (PSH (Bankr. N.D. Ill. Sept. 24, 2010 (granting 110-day initial extension; In re XMH Corp. 1, No (BWB (Bankr. N.D. Ill. May. 14, 2009 (granting four-month initial extension; In re Gen. Growth Props., Inc., Case No (ALG (Bankr. S.D.N.Y. July 28, 2009 (granting approximately six-and-a-half-month initial extension; In re TOUSA, Inc., No (JKO (Bankr. S.D. Fla. May 22, 2008 (granting five-month initial extension. 18

19 Document Page 19 of For these reasons, the Debtors respectfully submit that ample cause exists for entry of the proposed order extending the Exclusive Filing Period to February 18, 2014, and the Exclusive Solicitation Period to April 15, Notice 39. The Debtors have provided notice of this Motion to: (a the Office of the U.S. Trustee for the Northern District of Illinois; (b the entities listed on the Consolidated List of Creditors Holding the 30 Largest Unsecured Claims; (c the indenture trustee for the Debtors senior unsecured notes; (d counsel to the ad hoc committee of certain holders of the Debtors senior unsecured notes; (e the indenture trustee for the lessor notes related to the Debtors Powerton generating station in Pekin, Illinois, and units 7 and 8 of the Debtors Joliet, Illinois, generating station and the pass-through trustee for the related pass-through certificates; (f counsel to the ad hoc committee of certain holders of pass-through certificates related to the Debtors Powerton and Joliet generating stations; (g the owner trusts and the equity investors for the Debtors Powerton and Joliet generating stations (and their respective counsel, if known; (h the lender under Debtor Edison Mission Energy s letter-of-credit facility; (i the state attorneys general for states in which the Debtors conduct business; (j United States Attorney for the Northern District of Illinois; (k the Internal Revenue Service; (l the Securities and Exchange Commission; and (m the Environmental Protection Agency and similar state environmental agencies for states in which the Debtors conduct business. In light of the nature of the relief requested herein, the Debtors respectfully submit that no further notice is necessary. No Prior Request 40. No prior request for the relief sought in this Motion has been made to this or any other court. 19

20 Document Page 20 of 21 WHEREFORE, the Debtors respectfully request that the Court enter an order, substantially in the form attached hereto as Exhibit A, granting the relief requested herein and such other and further relief as the Court deems appropriate. Dated: April 15, 2013 /s/ David R. Seligman, P.C. James H.M. Sprayregen, P.C. David R. Seligman, P.C. Sarah Hiltz Seewer KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois Telephone: ( Facsimile: ( and - Joshua A. Sussberg KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York Telephone: ( Facsimile: ( Counsel to the Debtors and Debtors in Possession other than Camino Energy Company - and - David A. Agay Joshua Gadharf MCDONALD HOPKINS LLC 300 North LaSalle Suite 2100 Chicago, Illinois Telephone: ( Facsimile: ( Counsel to Debtor Camino Energy Company and Conflicts Counsel to the other Debtors and Debtors in Possession 20

21 Document Page 21 of 21 Exhibit A Proposed Order

22 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern Division In Re: BK No.: EDISON MISSION ENERGY, et al., (Jointly Administered Chapter: 11 Honorable Jacqueline Cox Debtor(s Re: Docket No. ORDER EXTENDING DEBTORS EXCLUSIVE PERIODS TO FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF Upon the motion (the Motion of the above-captioned debtors and debtors in possession (collectively, the Debtors for entry of an order (this Order extending the Debtors exclusive right to file a chapter 11 plan and to solicit votes for the plan, all as more fully set forth in the Motion; and the Court having found that the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b(2; and the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C and 1409; and the Court having found that the relief requested in the Motion is in the best interests of the Debtors estates, their creditors, and other parties in interest; and the Court having found that the Debtors provided appropriate notice of the Motion and the opportunity for a hearing on the Motion under the circumstances; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the Hearing ; and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. The Motion is granted as set forth herein. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. 2. The Debtors exclusive period to file a chapter 11 plan for each Debtor is extended through and including February 18, The Debtors exclusive period to solicit acceptances of a chapter 11 plan for each Debtor is extended through and including April 15, Entry of this Order is without prejudice to (a the Debtors right to seek from this Court such additional and further extensions of the Exclusive Periods within which to file and solicit acceptance of a plan of reorganization as may be necessary or appropriate or (b the right of any party in interest to seek to reduce the Exclusive Periods for cause in accordance with section 1121(d of the Bankruptcy Code. 5. The Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order. Rev: _bko

23 Enter: Dated: United States Bankruptcy Judge Prepared by: James H.M. Sprayregen, P.C. David R. Seligman, P.C. Sarah Hiltz Seewer KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois Telephone: ( Facsimile: ( and - Joshua A. Sussberg KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York Telephone: ( Facsimile: ( Counsel to the Debtors and Debtors in Possession Other than Camino Energy Company - and - David A. Agay Joshua Gadharf MCDONALD HOPKINS LLC 300 North LaSalle Suite 2100 Chicago, Illinois Telephone: ( Facsimile: ( Counsel to Debtor Camino Energy Company and Conflicts Counsel to the other Debtors and Debtors in Possession Rev: _bko