Calpine exit plan cleared

Calpine Corp., the energy company that filed the largest U.S. bankruptcy of 2005, won approval of a plan to pay off creditors with new stock and emerge from federal court protection.

U.S. Bankruptcy Judge Burton Lifland in New York confirmed the company’s Chapter 11 plan at a hearing Wednesday. Unsecured creditors will receive stock worth about 97% of what they are owed by Calpine, a San Jose-based power producer that generates enough electricity for about 19.2 million homes.

The ruling leaves Calpine poised to emerge from bankruptcy before its $7.6-billion exit-financing commitment expires Feb. 7.

The company reached a deal with creditors and shareholders to set the value of the new Calpine at $18.95 billion and give shareholders warrants to buy stock. Creditors and shareholders had differed by about $8 billion on Calpine’s reorganized value.

Calpine sought court protection after a U.S. power glut caused partly by company founder Peter Cartwright’s expansion push that dragged down prices.