Envisioned by its founders as a major global energy enterprise, a humbled Bonneville Pacific Corp. could emerge from years of scandal and bankruptcy later this year with more modest goals.
The first order of business under a Chapter 11 reorganization plan filed Wednesday is to restore stock and bond value and pay off creditors, made possible by a restructuring of the company and the recovery of more than $179 million owed it by outside interests, associates and company insiders.Bankruptcy trustee Roger G. Segal announced the filing of the plan Wednesday afternoon. A hearing on its adequacy is scheduled for June 3 in U.S. Bankruptcy Court. If the court accepts the 600-page document, creditors will then have an opportunity to vote to accept or reject it.
Under terms of the proposed reorganization, unsecured creditors who are owed more than $100 million would be paid in full; shareholders will get stock in the new company - trading Wednesday at $1.62 per share - and bondholders would be paid the $64.8 million they are owed plus 7.32 percent interest.
There are 11,686,723 shares of existing common stock in Bonneville Pacific, which would remain issued under the plan subject to a reverse stock split. The trustee holds an additional 9.65 million shares, 7.8 million of which were surrendered in 1996 by Portland General Corp., the principal defendant in the bankruptcy case.
Segal's settlement agreement with Portland General had a "disentangling effect" that paved the way for the reorganization effort that's now under way.
A seven-member board of directors would be formed to implement the plan. Members would include Steven H. Stepanek, the current president of Bonneville Fuels Corp.; someone selected by Wellhead Electric Co.; the bankruptcy trustee and individuals chosen by the trustee.
All officers of the company will remain in place until the first meeting of the board, at which time the board will elect its own officers and set the terms and conditions of employment in the rebuilt company.
According to Segal, the proposed plan is consistent with the terms of a conditional settlement between the trustee and certain creditors that was executed on Dec. 31, 1997.
Founded in 1977 by a half dozen business leaders - including Salt Lake Mayor Deedee Corradini - the "Bonneville Group" evolved over the next 10 years into a mult-faceted alternative energy company. In 1986, the private company went public as Bonneville Pacific Corp.
But it was not until the company filed for Chapter 11 bankruptcy in 1991 that investigators discovered that the initial public offering was "based upon the grossly exaggerated and ever-increasing paper value of the non-existent assets continually transferred between Bonneville and its related entities."
Several principals and company insiders were later criminally indicted in connection with the case and were sentenced to prison. At the same time, Segal doggedly pursued those who had contributed to the company's bankruptcy. In the end, a long list of big law and accounting firms and individuals paid settlements without admitting any wrongdoing.
Among the first to settle were Corradini and her former husband, Yan Ross, who paid $800,000 to be dropped as defendants in the bankruptcy case.