FirstEnergy Solutions – Seeking to Enforce Debtors’ Sale of Retail Energy Business, Exelon Files Complaint for Declaratory Judgment and Injunctive Relief

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November 26, 2018 – Exelon Generation Company, LLC (“Exelon” or “Buyer”) filed a complaint against Debtor FirstEnergy Solutions Corp. (“FES” or “Seller”) seeking a declaratory judgment and injunctive relief [Docket No. 1755] The complaint alleges, “Exelon and FES entered into an Asset Purchase Agreement dated July 9, 2018…pursuant to which Exelon agreed to purchase and FES agreed to sell (the ‘Transaction’) certain of FES’s assets comprising its retail energy business (the ‘Purchased Assets’), subject to the terms and conditions of the APA, including approval by this Court of the Bidding Procedures Order, APA, and Sale Order…. Exelon’s declaration that FES is in material breach of its obligations under the APA and FES’s denial of the same create an actual controversy regarding their legal rights under the APA, particularly regarding FES’s right—or loss of the right—to terminate the APA under Sections 10.01(b) and/or 10.01(d)(ii). 
 
Exelon is entitled to a judicial declaration that FES has failed to use commercially reasonable efforts to obtain a Sale Order by November 6, 2018, in material breach of Section 7.13(a)(iii) and that it has failed to use reasonable best efforts to consummate the Transaction as promptly as practicable in material breach of Section 7.01 of the APA such that FES cannot terminate the APA under Sections 10.01(b) and/or 10.01(d)(ii)….Exelon is entitled to injunctive relief maintaining the status quo and preventing FES from purporting to terminate the APA under Sections 10.01(b) and/or 10.01(d)(ii) on grounds that the Closing has not occurred or cannot occur by December 31, 2018. Exelon has a strong likelihood of demonstrating to this Court that FES has failed to use commercially reasonable efforts to secure a Sale Order by November 6, 2018, in material breach of its obligation under Section 7.13(a)(iii) of the APA or use reasonable best efforts to consummate the Transaction as promptly as practicable in material breach of its obligation under Section 7.01 of the APA….In addition, if FES is permitted to continue its commercially unreasonable delay past the End Date or otherwise allege that consummating the Transaction has become impossible and FES is not enjoined from exercising its purported termination rights under Sections 10.01(b) and/or 10.01(d)(ii), FES could seek to purportedly terminate the APA under Sections 10.01(b) and/or 10.01(d)(ii) despite being in material breach of the APA and deny Buyer the opportunity to purchase the Purchased Assets…Granting the injunctive relief sought herein will not implicate the public interest, except to promote the enforcement of contractual agreements.”

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