A Southern Montana electric cooperative has filed for bankruptcy citing an “acute cash flow problem.”
Three members of the Southern Montana Electric Generation and Transmission board voted to raise rates by 20 percent and to file for Chapter 11 bankruptcy protection. The rate increase was the fourth since December.
The company listed debts ranging from $100 million and $500 million according to court papers filed on October 21, as reported by Business Week. Southern Montana Electric is comprised of five collectives that provide power to 65,000 residents in the area.
Two of the collectives, Yellowstone Valley Electric and Great Falls are suing to get out of their contract. The proceedings will likely be delayed while because of the bankruptcy filing.
There are 20 largest creditors without collateral backing are owed roughly $19.5 million. Business facing extreme debt can seek the counsel of a bankruptcy attorney to see if bankruptcy is the right choice.
The president for the Yellowstone Valley Electric who belongs to the cooperative told KQTV that one of a Take or Pay contract requires that Southern pay for electricity the co-op cannot use. He believes that this has cost them $9 million between April and August.
Bankruptcy lawyers make it possible for a business to seek debt protection and make the company financially solvent. Determining which filing to choose can be impossible without a bankruptcy lawyer, who will assess the amount of debt and figure which means will be employed to repay those debts.
