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BUSINESS: New Orleans-Based Subsidiary of Entergy Files for Bankruptcy

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posted on Sep, 23 2005 @ 11:16 PM
The New Orleans component of Entergy has filed for bankruptcy protection in the wake of damage to the utility infrastructure caused by Katrina and Rita. Entergy New Orleans Inc., will seek to borrow two hundred million dollars from its parent company. A bankruptcy hearing will be held Monday.
Facing huge rebuilding costs and a loss of revenue following Hurricane Katrina, the New Orleans-based subsidiary of Entergy Corp. has filed for bankruptcy protection.

Entergy New Orleans Inc., announced the move Friday. It also said it plans to borrow up to $200 million from its parent corporation, pending court approval, to pay wages and benefits, make payments under existing power purchase and gas supply agreements and continue repairing and restoration of facilities wrecked by Katrina.

"We took this action after careful review of the various options available to preserve Entergy New Orleans' business over the near- and long-term" Dan Packer, Entergy New Orleans' chairman and chief executive officer, said in a news release. "Due to our parent company's financial support, we can focus on the city's reconstruction and rebirth, as those restoration efforts continue today."

A hearing was set for Monday on the bankruptcy petition, the company said.

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This move is an indication of the massive damage that has been done to New Orleans and surrounding areas. Entergy will survive this, but it could not do so without legal protection and a massive infusion of funds. It is also a clear sign that the rebuilding process in New Orleans is actually underway even as the city is again filling with water.

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