Energy Future directors ask to dismiss Aurelius suit on loan

Energy Future Holdings Corp. directors asked a federal court to dismiss Aurelius Capital Management’s lawsuit, saying the hedge fund bought the power producer’s debt in a bid to profit from litigation.

 Aurelius sued in March over loans made within the company, saying the financing extended to the parent company from a subsidiary harmed creditors. The directors said today in court papers that Aurelius can’t sue because it previously “ratified” the loans at issue in the case.

 “Aurelius is not an innocent creditor that had the misfortune of making an investment only later to see that investment deteriorate,” lawyers said in the filing in federal court in Dallas. “Just the opposite — Aurelius saw an opportunity to manufacture a contrived injury.”

 Energy Future, formerly known as TXU Corp., was taken over in a $48 billion buyout in 2007 led by KKR & Co., TPG Capital and Goldman Sachs Capital Partners. A proposal in April to place one part of the business that owes $32 billion into bankruptcy was rejected by creditors.

 The case is Aurelius Capital Master Ltd. v. Acosta, 13-cv- 01173, U.S. District Court, Northern District of Texas (Dallas).

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