NRG Energy Inc. last week said that it has reached a settlement with all seven former executives who filed an involuntary Chapter 11 petition against NRG late in 2002. The Xcel Energy subsidiary will ask the U.S. Bankruptcy Court for the District of Minnesota to approve the settlement and dismiss the petition.

“This agreement with the petitioners is in the best interests of NRG and all its creditors,” said Scott J. Davido, NRG general counsel. “We are continuing at this time to develop a debt restructuring plan with our creditors, outside of court, that will return NRG to sound financial health.”

NRG in December had asked the bankruptcy court to dismiss the petition.

No hearing to approve the settlement has been set at this time. A hearing on dismissal of the involuntary petition is currently scheduled for April 29. As part of the settlement, the former executives will not oppose dismissal of the petition.

NRG has been engaged in negotiations with its bank lenders and bondholders to develop a plan for restructuring the company’s debt. The company is one of several downtrodden merchant energy companies trying to stave off having to file for bankruptcy.

In early November, an NRG restructuring plan was presented to the company’s creditors. The restructuring plan also included a proposal addressing Xcel’s continuing role and degree of ownership in NRG and obligations to the generator. The plan proposed that upon consummation of the restructuring Xcel would pay $300 million to NRG. The plan separately proposed that Xcel would surrender its equity ownership of NRG.

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