Edison Mission Energy/Midwest Generation

O’Melveny secured a strong recovery for the noteholders of Midwest Generation (MWG) in the chapter 11 proceedings for MWG and its parent company, Edison Mission Energy (EME), which was the second largest bankruptcy filing of 2012. At the outset of the case, the debtors threatened to reject the leases and cap the noteholders' damages at a fraction of the amount outstanding under the notes by recharacterizing the personal property leases as leases of non-residential real property. O’Melveny argued that the leases were personal property leases and not subject to the rejection damages cap under the Bankruptcy Code or, in the alternative, secured financings entitled to a secured claim against the bankruptcy estate. Faced with the prospect of a lengthy and costly litigation over the debtors' ability to reject the sale-leaseback documents, O’Melveny was instrumental in formulating a creative win-win solution that provided for the strategic sale of the debtors' assets to NRG Energy Holdings Inc. and the assumption of the debtors' liabilities under the sale-leaseback documents.