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FirstEnergy Solutions files contract settlements with TerraForm Power, railways

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FirstEnergy Solutions files contract settlements with TerraForm Power, railways

FirstEnergy Solutions Corp. reached agreements with TerraForm Power LLC and two railroad companies that will grant them recovery of damages for rejected contracts through general unsecured claims in the company's federal bankruptcy case.

Under the agreements filed Sept. 17 in the U.S. Bankruptcy Court for the Northern District of Ohio, TerraForm Power will be allowed a general unsecured claim of $400,000 against FirstEnergy Solutions, or FES, for the court-approved rejection of the purchase and sale of renewable energy credits.

BNSF Railway Co. and Norfolk Southern Corp. will be allowed a joint general unsecured claim of $350 million against FES subsidiary FirstEnergy Generation LLC for the bankruptcy court-approved rejection of coal transportation contracts. In October 2018, BNSF filed a proof of claim in the amount of $1.12 billion against FirstEnergy Generation with respect to damages from certain rail transportation agreements, while Norfolk Southern also filed a proof of claim in the amount of about $1.12 billion for its damages.

FES and FirstEnergy Generation wrote in their filings with the bankruptcy court that BNSF and Norfolk Southern have elected to receive cash for their claims. The debtors, however, noted that the railroad companies will have the option to change their election to new common stock if the stipulation is not approved by the federal bankruptcy court.

The companies added that the settlement was reached following "significant and extended, arms-length, and good-faith negotiations" and to avoid further litigation that would be "very costly and time consuming to resolve."

Akron, Ohio-based FES, its subsidiaries and FirstEnergy Nuclear Operating Co. filed for Chapter 11 bankruptcy protection in late March 2018.

The bankrupt power provider submitted its sixth amended reorganization plan in late July and announced the appointment of an eight-person board of directors whose members will take their seats once the restructuring is approved.

In late August, U.S. Bankruptcy Judge Alan Koschik delayed a decision on the reorganization plan, ordering FES to continue to negotiate with unions representing workers at its nuclear plants.