Energy Future Holdings Pitches New Plan To End Epic Bankruptcy

Energy Future Holdings, Texas’ largest power company, is going back to the drawing board in its efforts to emerge from one of the largest corporate bankruptcies in American history.

The conglomerate filed a second plan to shed tens of billions of dollars of debt on Sunday, five months after a Delaware bankruptcy judge approved an original plan that fizzled.

The filing comes as the initial plan’s controversial centerpiece — a roughly $18 billion sale of its subsidiary Oncor to an investor group led by the Dallas-based Ray L. Hunt family — faces major stumbling blocks. Oncor, Energy Future’s only steady moneymaker, is the state’s largest electric utility, with 119,000 miles of transmission and distribution lines that deliver power to more than 3 million homes and businesses in North and West Texas.

Read MoreHunt Group Asks For Re-hearing on Oncor Bid

Like the original reorganization plan, this one would spin off Energy Future’s electric generation and retail side to its creditors tax-free, allowing them to be paid in full. But Oncor’s fate is less clear.

Creditors could take control of Oncor under the new plan, or Energy Future could sell the transmission and distribution utility. 

The Hunts suggest that Energy Future is leaving the door open to their effort to buy Oncor and transform it into a real estate investment trust — a structure that would allow investors to save on federal taxes.

“The new plan filed by EFH early this morning explicitly contemplates a potential [real estate investment trust] transaction under our current proceeding before the Public Utility Commission of Texas,” Jeanne Phillips, a spokeswoman, said in a statement. “Hunt will continue to move forward.”

In March, the Public Utility Commission signed off on the Hunt group’s proposal but added major stipulations, including the possibility that its investors would be forced to share tax savings from the deal.

Last month, the Hunt group asked for a re-hearing, making clear that its investors would not support the added restrictions. The commission will discuss that request on May 4.

The Hunt proposal has a host of critics, including consumer groups, some Texas lawmakers and the utility commission’s staff. They say it would allow the new Oncor to collect hundreds of millions of dollars each year earmarked for federal taxes that the company wouldn’t actually have to pay — a transfer of wealth from ratepayers to investors.  

The family has pushed back against that characterization and suggests that it offers the best path toward ending Energy Future’s two-year bankruptcy, which has cost the company $1 million dollars each day in legal fees and has eaten up regulators' time. 

Read MoreMassive Bankruptcy Tests Texas Utility Regulators

Energy Future – known as TXU Corp. before a massive leveraged buyout in 2007 – accumulated some $42 billion in debt after betting big on natural gas prices that later plummeted.

Aside from Oncor, the company also owns other crucial pieces of the Texas energy market. Luminant, the state's largest generator, has a fleet of 14 coal, natural gas and nuclear plants that can power nearly 20 percent of the grid. TXU Energy is one of the state's largest retail electric providers, serving more than 1.7 million Texans.