Shawano Municipal Utilities will hire an attorney versed in Delaware bankruptcy law to protect the utility’s interests after the Chapter 11 filing this week of Samanta Roy Institute of Science and Technology, Inc. and six of its subsidiaries.
Several SIST or subsidiary operations have utility accounts with SMU.
The SMU Commission held an emergency meeting Thursday afternoon to take up the issue.
SIST CEO Naomi Isaacson on March 13 filed an affidavit along with the Chapter 11 petition in U.S. Bankruptcy Court in Delaware, where SIST and its subsidiaries reincorporated last month.
The affidavit states SIST would file court orders seeking to be allowed to use cash collateral during the Chapter 11 reorganization of its business, as well as setting up ground rules for the utility companies providing service to those businesses during the bankruptcy period.
SIST is seeking an order "prohibiting utilities from altering, refusing or discontinuing service for pre-petition invoices, deeming that the utility companies are adequately assured of post-petition payment, and establishing procedures for determining requests by the utility companies for additional adequate assurance of payment."
"The odd thing is they’re talking about post-petition payment," said SMU General Manager Okho Bohm Hegedorn, adding the language makes it unclear whether SIST might file a motion affecting future billing.
Amounts due up until the bankruptcy petition is approved would ultimately be wiped off the books and SIST would, in essence, become "a new customer," according to SMU. SIST currently owes about $12,000, with $4,700 past due, SMU said.
However, there were concerns that Delaware’s bankruptcy laws might significantly differ from bankruptcy laws in Wisconsin, leaving SMU at the mercy of a surprise court motion affecting utility payments.
"We risk losing more (in utility payments) than the cost of attorney bills," Bohm Hegedorn said, relaying advice she said came from the state Public Service Commission.
The Delaware attorney will cost $300 an hour, along with a $5,000 retainer, Bohm Hegedorn said.
The commission unanimously supported the move.
