The Third Circuit denied a $275 million break-up fee to a bidder
that was unsuccessful in its attempt to buy the crown-jewel assets
in the high-profile EFH bankruptcy case. In re Energy Future
Holdings Corp., No 18-1109, 2018 U.S. App. LEXIS 25945
(3rd Cir. Sept. 13, 3018). The court held that the
bidder's efforts didn't result in a benefit to the
debtors' estates. Therefore, the bidder's request for an
administrative expense in the form of the fee was rejected.
This issue reached the Third Circuit after the Bankruptcy Court
in Delaware initially awarded the fee, but then denied it on a
motion for reconsideration. The Bankruptcy Court realized
that it had misunderstood a key fact when it awarded the
fee. When it later realized how the fee could be triggered,
the Bankruptcy Court said the bidder wasn't entitled to the
fee. The Bankruptcy Court reversed its prior decision and the
appeal followed.1
