NorthWestern Energy Corp., the South Dakota-based energy holding company, announced last Thursday that the U.S. Bankruptcy Court for the District of Delaware has approved its settlement with Magten Asset Management, Law Debenture Trust Company of New York and holders of quarterly income preferred securities, marking the end of the last major disputed claim in its 2003 Chapter 11 proceedding.

Under the agreement, a payment of $23 million will be allocated between Magten, Law Debenture and holders of the preferred securities. The $23 million will be paid out of a disputed claims reserve that was established after the company filed for bankruptcy protection in September 2003.

NorthWestern CEO Michael Hanson said the $23 million settlement was the last major claim related to his company’s bankruptcy case, from which it emerged in late 2004 (see Daily GPI, Nov. 5, 2004). At the time of the emergence, NorthWestern said a total of 4,409,100 shares, or 13.5% of the new common stock, was being held in reserve pending resolution of contingent or otherwise unliquidated claims.

Hanson said NorthWestern will be reimbursed for $4 million in legal fees and expenses under a separate agreement.

After the distributions under the settlement agreement have been completed, there will be a supplemental distribution of all of the remaining assets in the disputed claims reserve to unsecured creditors and debt holders in Class 7 and Class 9 under the company’s reorganization plan approved by the court and creditors when it emerged from Chapter 11, other than the holders of the quarterly income preferred securities (QUIPS). The value of the supplemental distribution to each of these unsecured creditors and debt holders is not presently known, NorthWestern said.

“This settlement resolves the last major claim, and we will now be able to put closure on that piece of our past and focus on providing exceptional value for our shareholders in the future,” Hanson said.

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