Calpine Appeals Payment Ruling

Calpine Corp., the biggest U.S. operator of gas-fired power plants, filed an appeal with the Delaware Supreme Court to avoid a judge’s ruling to pay back $311.7 million it improperly spent on fuel.

The motion, made public Tuesday in court electronic files, asks the justices for expedited proceedings to overturn a Friday order by Delaware Chancery Court Judge Leo Strine Jr. to return the money to a Bank of New York account by Jan. 22.

Wilmington Trust Co., trustee for bondholders, asked for the money to be returned as San Jose-based Calpine, which has $17 billion in debt, tried to avoid filing for bankruptcy protection.

“Calpine is suffering financial stress and is considering bankruptcy protection” based on the judgment, Calpine lawyer Peter B. Ladig wrote in its motion.

The bank’s refusal to release as much as $851 million of Calpine’s money “is causing tremendous harm to Calpine,” said Eric Pryor, deputy chief financial officer, in an affidavit filed with the state Supreme Court.

Strine on Nov. 22 barred Calpine from using about $400 million left in the account from the sale of gas fields in July.

The judge concluded that Calpine violated agreements with note holders by trying to use the money to buy stored gas.

At a hearing last week, Strine was skeptical of Calpine’s contention that it was near bankruptcy, in light of earlier testimony that it had $28 billion in assets.