Bondholders Dealt Setback In Calpine Debt Struggle

Law360, New York (May 11, 2006, 12:00 AM EDT) -- Tuning out the protests of Calpine Corp.’s first-lien bondholders, a federal bankruptcy judge has authorized the beleaguered power giant to repay all of its outstanding $646.1 million debt to the bondholder group, while temporarily suspending a $96 million prepayment penalty.

On Wednesday, U.S. Bankruptcy Judge Burton Lifland ruled that Calpine may pay off its first-lien bondholders but did not have to immediately shell out for a nearly $100 million fine, as the holders had previously requested.

The news came as a blow to the bondholders, who...
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