NorthWestern Energy Corp., the South Dakota-based utility holding company, indicated last Wednesday it expects to emerge from Chapter 11 bankruptcy today, despite eleventh-hour legal challenges from one unsecured creditor, Magten Asset Management Corp. Magten’s request for a stay was turned down last week by the U.S. Bankruptcy Court Judge Charles Case in Delaware, and the firm has turned to a federal district court in South Dakota where its plea was expected being heard on Friday.

“This is just another attempt to promote their point of view, which the court already has denied repeatedly,” a NorthWestern spokesperson said. “Our attorneys tell us that no bankruptcy reorganization confirmation has ever been overturned by a federal district court.”

Magten has attempted to argue that holders of securities in NorthWestern like itself face “substantial risk” once the court-approved reorganization plan becomes effective because it and other holders of the Series A 8.45% quarterly income preferred securities have been deprived of their rights to seek a full recovery of those investments in assets originally owned by Montana Power Co. and purchased in 2002 by NorthWestern.

Separately last week, NorthWestern priced $225 million of senior secured notes due 2014 with an annual 5.875% interest rate. The notes will be issued when it emerges from bankruptcy and a new board of directors takes over, both of which are scheduled for today.

The notes are tied to two series of existing first mortgage bonds secured by NorthWestern’s regulated electric and gas utility assets in Montana where 80% of its holdings are located. The rest of NorthWestern’s operations are in South Dakota and Nebraska.

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