Calpine battles to avoid Bankruptcy

The 200-01 California Energy Crisis is still taking its victims as Calpine endures a slow, painful death.

Calpine Corp. struggled to avoid a forced bankruptcy filing Wednesday, sparring in a flurry of court actions with bondholder trustees who threatened to declare the San Jose energy firm in default on $3 billion in debt if it did not restore $312 million to an escrow account by day's end.

The company appealed to a Delaware judge for a temporary restraining order preventing Wilmington Trust Co., the bondholders' representative, from moving for immediate repayment. A default on these securities, Calpine said in court papers, could "irreversibly damage Calpine's already precarious financial situation and immeasurably injure Calpine's other stake holders."

"Such a declaration could trigger cross defaults on other Calpine debt," Calpine said in its motion for a restraining order, obtained by the Associated Press. (Bond contracts often require the debtor to be making timely payments on its other obligations.) "Calpine will be unable to calm roiled markets, address the company's continuing cash-flow demands and generate the additional cash necessary to redeposit the restoration amount."