Aurelius Sues Private Equity-Owned Power Co. Over Loans

Mar 22 2013 | 11:44am ET

Two years after first leveling accusations that Energy Future Holdings was playing fast-and-loose with its books, hedge fund Aurelius Capital Management has sued the power company's board and CEO.

Aurelius alleges that it and other creditors were harmed by billions of dollars in loans EFH took from a subsidiary, Texas Competitive Electric Holdings, between 2007 and January. In 2011, Aurelius said those loans put EFH in default on nearly $24 billion in debt.

"The loans did not reflect a fair transaction between the companies," Aurelius, a creditor of Texas Competitive, alleged in the March 19 complaint. "No unaffiliated third party would have extended such loans." The hedge fund said that EFH saved $725 million borrowing from Texas Competitive.

According to Aurelius, Texas Competitive has been insolvent since 2010. In 2011, the International Swaps and Derivatives Association ruled against Aurelius on that claim.

EFH is owned by Kohlberg Kravis Roberts and TPG Capital Management. It did not comment on Aurelius' lawsuit, but two years ago said the hedge fund's claims were baseless and a bid to manipulate the credit default swaps market.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...