Shannon Wind - Chapter 11 Case Summary

Business Description

Shannon Wind, LLC ("Shannon Wind" or the "Debtor") owns and operates a 204.1 megawatt ("MW") wind farm located in Clay County, Texas (the "Project"). The Project is situated in North Texas, one of the strongest wind resource regions in the United States, and commenced commercial operations in December 2015.

• The Project consists of 119 General Electric 1.7-103 wind turbines with approximately 204MW of wind power capacity.
• Power generated by the Project feeds into the Electric Reliability Council of Texas ("ERCOT") grid via transmission lines managed by Oncor Electric Delivery Co.

Shannon Wind currently operates with full merchant exposure for its production. Previously, the Debtor maintained a long-term hedge arrangement with Citigroup Energy Inc. ("CEI") that functioned as a fixed-price sale agreement against the ERCOT spot market. However, CEI terminated this arrangement effective September 17, 2025, due to the Debtor's failure to satisfy its obligations thereunder.

• Shannon Wind continues to sell Renewable Energy Certificates ("RECs") generated by the Project's power production to CEI under a separate agreement.

The Debtor has no employees. Operations are managed entirely through third-party service providers and independent contractors, including an independent contractor engaged to provide Chief Restructuring Officer services.

Shannon Wind is wholly owned by Shannon Wind Holdings, LLC ("Holdings"). The ownership structure of Holdings reflects a tax equity financing arrangement common in renewable energy projects:

• Class A Interests (Tax Equity): Owned by Citicorp North America, Inc. and MidAmerican Wind Tax Equity Holdings, LLC.
• Class B Interests: Owned by Shannon Partnership Holdings, LLC, which is ultimately owned by Lotus, a private equity firm that targets investments in energy infrastructure assets.

The Debtor holds long-term control over the real estate encompassing the Project through multiple leases and easements.

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Operations Overview

Shannon Wind relies on several key service providers to manage and operate the Project:

Operations and Maintenance

• GE Vernova International LLC ("GEV") provides operation, monitoring, and maintenance services for the wind turbine generators.

Administrative and Asset Management

• Consolidated Asset Management Services ("CAMS") provides administrative and asset management services for the Project.

Energy Management and Scheduling

• Tenaska Power Services Co. ("Tenaska") serves as the exclusive qualified scheduling entity and energy manager for the Debtor.
  • Tenaska manages all operational functions with ERCOT and markets all of the Project's production.

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Prepetition Obligations

As of the Petition Date, the Debtor reports approximately $5.1 million in funded debt obligations, with an additional $102.9 million owing to CEI under the Energy Hedge Agreement - Power, exclusive of accrued and accruing professional fees.

Energy Hedge Obligations

• On June 29, 2015, the Debtor and CEI entered into two ISDA 2002 Master Agreements governing the Company's energy hedging arrangements:
  • Energy Hedge Agreement - Power: Governs power-related hedging transactions.
  • Energy Hedge Agreement - REC and Capacity: Governs renewable energy credit and capacity transactions.
• The Energy Hedge Agreements are secured by first-priority liens on substantially all of the Debtor's assets, as well as a pledge of Holdings' membership interests in the Debtor.
  • The first-priority lien status was achieved upon satisfaction of the Debtor's prior Construction Credit Agreement obligations in December 2015.
• According to CEI, the Debtor's combined obligations under the Energy Hedge Agreement - Power and the Protective Advance Note total approximately $108.1 million, excluding accrued and unpaid fees and expenses.

Prepetition Protective Advance

• On November 5, 2025, the Debtor and CEI entered into a Senior Secured Promissory Note (the "Protective Advance Note") to fund the Debtor's ongoing business operations.
• Approximately $5 million is outstanding under the Protective Advance Note.
  • The facility is secured by a first-priority lien on substantially all of the Debtor's assets, ranking pari passu with the liens securing obligations under the Energy Hedge Agreements.

Historical Debt (Satisfied)

• The Debtor previously maintained a construction loan facility under a Credit Agreement with Citibank, as administrative and collateral agent, providing for loans up to $212.2 million and certain letter of credit facilities.
  • The Construction Credit Agreement was secured by substantially all of the Debtor's assets and was fully satisfied in December 2015.

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Events Leading to Bankruptcy

Energy Hedge Obligations and Merchant Price Risk

• Like many renewable energy generators, Shannon Wind executed hedge agreements to secure predictable cash flow and mitigate merchant price risk:
  • In 2015, the Debtor entered into Energy Hedge Agreements with Citigroup Energy Inc. ("CEI"), requiring delivery of a fixed quantity of electricity in exchange for a fixed price of $26.20 per megawatt-hour ("MWh").
  • The Debtor also sells renewable energy credits ("RECs") generated by the Project to CEI at a fixed rate of $0.75 per REC.

Winter Storm Uri and Hedge Shortfall

• In February 2021, Winter Storm Uri brought extreme freezing temperatures and dangerous weather conditions to Texas, triggering state and federal disaster declarations and causing widespread power outages:
  • The Project's wind turbines suffered significant blade icing, severely impeding energy production during the storm.
  • In response to the crisis, ERCOT and the Public Utility Commission of Texas ("PUCT") issued orders raising the market price of electricity to the regulatory ceiling of $9,000/MWh for approximately four days to reflect supply scarcity and incentivize generation.
• Unable to produce energy, the Debtor could not fulfill its obligations to deliver electricity at the fixed hedge price and became liable under its hedge agreements to purchase the required electricity at the elevated $9,000/MWh rate:
  • The Debtor issued force majeure notices to CEI asserting that its obligations under the Energy Hedge Agreements should be excused.
  • Notwithstanding these notices, CEI issued an invoice to Shannon Wind on or around March 11, 2021, in the amount of $39,486,641.34, primarily calculated for alleged delivery shortfalls at or by reference to the imposed $9,000/MWh pricing.
  • The Debtor disputed CEI's invoice but lacked sufficient cash to satisfy the payment demand, prompting CEI to issue notices of default.

State Court Litigation

• In April 2021, the Debtor and its parent, Shannon Wind Holdings, LLC ("Holdings"), filed suit against CEI in the District Court of Harris County, Texas:
  • The plaintiffs sought declaratory judgments that the Debtor was excused from performance under force majeure, that CEI's $39 million invoice was improperly calculated and constituted an unenforceable penalty, that no event of default had occurred, and that CEI's default notice was invalid.
  • The Debtor also asserted a breach of contract claim against CEI.
• Given the deadlines in CEI's demands, the Debtor requested injunctive relief to halt enforcement actions pending resolution of the disputes:
  • The state court granted a temporary restraining order but denied the Debtor's request for a preliminary injunction.
  • The Debtor's petition against CEI was ultimately dismissed in February 2023.

Additional Defaults and Enforcement Actions

• During the pendency of the state court litigation, CEI issued additional notices of default to the Debtor under the Power Hedge Agreements.
• On or about April 13, 2022, CEI exercised remedies under its collateral documents, directing Citibank, N.A., as first lien collateral agent, to deliver an account stop notice and execute a cash sweep of the collateral accounts:
  • Approximately $14 million was swept in partial satisfaction of the outstanding amounts owed to CEI.

Multi-Year Negotiations and Failed Consensus

• Following CEI's default notices, CEI, Citibank, and principals of Lotus Infrastructure Partners ("Lotus")—the indirect parent entity of the Project's developer—engaged in protracted negotiations over the course of several years:
  • The parties participated in dozens of discussions and exchanged proposals regarding amounts owed and potential paths to resolution.
  • Despite these efforts, the parties never reached agreement on an actionable plan to resolve the Debtor's obligations.

CRO Appointment and Operational Stabilization

• On or about September 16, 2025, CEI exercised remedies under its collateral documents to direct Citibank to cause the Debtor to amend its operating agreement and retain Accordion Partners as financial advisor, with John Shepherd appointed as Chief Restructuring Officer ("CRO").
• Since his appointment, the CRO has focused on:
  • Day-to-day operations of the Project and stakeholder communications;
  • Ensuring sufficient cash for operations while evaluating strategic and financial restructuring alternatives, including a potential sale of the Project;
  • Approving a $5 million prepetition loan from CEI for interim liquidity; and
  • Engaging with the Debtor's independent contractors and counsel to maintain Project stability.
• Efforts to facilitate a consensual resolution among CEI, Citibank, and Lotus were unsuccessful, leaving no clear path forward outside of a court-supervised process.

Independent Manager Appointment and Governance Enhancement

• On or about January 22, 2026, CEI exercised remedies under its collateral documents to direct Citibank to cause Holdings to appoint John D. Jones as independent manager for the Debtor, through his wholly-owned entity, Redbud New Energy, LLC:
  • Mr. Jones brings over 30 years of experience in the development, acquisition, commercial execution, and financing of wind, solar, energy storage, and natural gas-fired independent power projects.
  • His expertise includes project-financed assets, hedging strategies, covenant compliance, and liquidity management in volatile commodity markets.

Sale Process and Chapter 11 Filing

• Prior to the Petition Date, the Debtor engaged Nomura Securities International, Inc. ("Nomura") as investment banker to assist in marketing and selling the Debtor or its assets:
  • The marketing process remains in early stages, and the Debtor does not have a binding offer from a proposed buyer.
  • A bankruptcy sale process was determined to be the most efficient means of pursuing a sale free and clear of all claims, thereby maximizing value for all stakeholders.
• The Debtor is targeting a sale closing within 150 days after the Petition Date, with a liquidating plan of reorganization or other appropriate relief to follow.

Cash Collateral and Path Forward

• The Debtor and CEI have agreed upon a 13-week budget governing the use of cash collateral to fund operations during the Chapter 11 Case:
  • Without access to cash collateral, the Debtor would be unable to fund ongoing operations and would be forced to shut down, causing irreparable harm and destroying going-concern value.
• The Debtor's immediate objective is to maintain business-as-usual operations with minimal disruption while pursuing the marketing and sale process:
  • A bid procedures motion will be filed seeking Court approval of the marketing and sale timeline necessary to bring the Chapter 11 Case to a successful conclusion.