Aurelius Capital Management has taken its fight with Energy Future Holdings to the International Swaps and Derivatives Association.
The hedge fund, which sought a default holding against EFH's Texas Competitive Electric Holdings in February, has asked ISDA to rule that the company is insolvent. Such a holding could trigger $1.2 billion in credit default swaps on the company's debt.
Texas Competitive earlier this month said that its outstanding debt exceeds its enterprise value. Aurelius called that a "flat-out admission" that the company is insolvent.
"Simply put, there is overwhelming evidence that TCEH is insolvent," Aurelius wrote to ISDA.
In April, EFH was able to evade Aurelius' allegations that it had defaulted on its debt by borrowing from Texas Competitive. EFH is owned by private equity giants KKR & Co. and TPG Capital.