Letter to the Court: How Did FirstEnergy Solutions Get Thrown to the Wall Street Vultures?

January 20, 2021

Judge Alan Koschik

U.S. Bankruptcy Court

Seiberling Officer Building

2 S. Main St.

Akron, Ohio   44308

Re: In re: Pleasants Corp. Case No. 18-59763

Hon. Judge Koschik:

I write this letter as a citizen of Ohio, as a customer of FirstEnergy, and as someone concerned about the integrity of the federal judicial system.

I attended the hearing yesterday in this case named above, and had a few thoughts that I wanted to share in case they had not been brought up by others.

Although the Court asked Akin Gump to prepare the requested affidavits right away to preserve their memory, the Court also ruled that Akin Gump itself would retain custody of the affidavits and not share them with the court.

I don’t know if you thought of this, but the Court has the option of having these documents submitted in camera for the Court’s viewing only, and I believe this might be a good idea for a number of reasons.

The Court had brought up the issue that attorney-client privilege might be invoked in this case. If the lawyers who are supposed to supply these affidavits choose to assert lawyer-client privilege, then you will just end up with a bunch of envelopes filled with one sentence “I object to the disclosure of these facts based on privilege,” and your goal of having these events clearly remembered in affidavits will not be met.

The law is clear that it is only legal advice that is privileged, and that lawyers who give business advice or provide non-legal business services – such as lobbying – are not protected by privilege. Nevertheless the attorneys involved might be hoping that you don’t know that and that they can evade disclosure in this way.

Additionally, it’s worth noting that one of the Akin Gump lobbyists, Geoffrey Verhoff, is not an attorney, and did not provide services for an attorney, and so there is no doubt whatsoever that he cannot claim privilege.

It’s really unclear to me what lobbying has to do with enacting a successful bankruptcy plan. These invoices should really not have been included in bills presented to the court, but I guess this was done so they would receive priority payment.

So I recommend that the Court has these affidivits – or assertion of privilege – be submitted to the Court for its in camera viewing, and not held by Akin Gump itself. It is just going to slow things down if these lobbyists intend to assert privilege and then nothing is gained in terms of wrapping up the bankruptcy speedily.

The second thing on my mind is the assertion by Ohio State Attorney General David Yost that the bankruptcy process itself was part of the fraudulent scheme alleged by the U.S. Attorney. I am viewing him as a legal authority speaking not frivolously, but authoritatively on behalf of the entire state of Ohio

As you recall, FirstEnergy Solutions had a valid purchase offer from Exelon, the nation’s largest generator of nuclear power.

This offer  was rejected, and the company was for all intents and purposes “steered” into the hands of Wall Street Vulture funds such as Avenue and Nuveen, whose only purpose in owning the company was to make a quick windfall profit off of bond speculation -- buying up bonds on the cheap and converting them into ownership.

I note in passing that for this to happen, these bond speculators would have to have had advance knowledge that the HB6 subsidy would pass and particularly inside knowledge that the Governor would not veto the bill – which is what happened the last time a nuclear subsidy was passed by the state legislature. The Governor at the time vetoed it. It would be risky for a Vulture Fund to make such a high stakes investment without advance knowledge that a veto would not occur a second time.

Perhaps I am not expressing this well, but I am concerned that this was some kind of “scheme” for windfall profits that was “cooked up” by one of the law firms involved.

For example, for windfall profits to occur, it had to be ensured that the emerged Energy Harbor would have sufficient cash on hand – in this case, $800 million in readily available cash – so as to buy out the short term high-risk investors as soon as the bankruptcy was closed.

The entity that included that $800 million in disposable cash was whichever law firm wrote up the bankruptcy plans and the outlined in specific detail the way stock ownership and stock sale was to be handled upon exiting bankruptcy.

I would therefore request on behalf of the pepole of Ohio that a conflicts check be ordered to be made by all the law firms involved, to ensure that TIAA, Nuveen, and Avenue Capitol, as well as other unidentified firms that bought bonds for 30 cents on the dollar, converted them to stock, and then immediately cashed out at a huge profit, had no prior business or personal relationship with whichever law firm insisted that the emerged company would have $800 million in cash readily available to buy out short-term speculators.

I’m sure it was never the intention of this Court to throw the company into the hands of Wall Street Vulture funds to be picked apart like carrion, but that is what happened as a result of the plan that was approved. Vulture funds did a similar thing to the country’s newspaper companies, which were looted and now lie in ruins.

The future management of Energy Harbor as a speculative financial instrument to be “looted” upon every occasional possible to the advantage of speculators and to the possible harm of state residents is of huge concern to the public interest. We have already seen Energy Harbor try to break union contracts – and the last people you want managing nuclear power companies in Ohio are disgruntled workers who feel they have been screwed over.

I would therefore like a conflicts check with the buyers of these bonds and the law firms involved in this case be made, in order to ensure the integrity of the federal bankruptcy bench.

And I would also like the affidavits in question to be submitted to the Court in camera.

Sincerely,

Jeff Barge

Cleveland, Ohio