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Entergy (ticker: ETR) had its New Orleans business unit (Entergy New Orleans) declare for Chapter 11 bankruptcy protection, writes utility analyst Sandy Cohen. The move allows Entergy New Orleans to borrow money from its parent, and more importantly, to allow its parent (NYSE:ETR) become a "debtor in possession" lender, a designation that under bankruptcy rules allows ETR to get 1st priority for getting repaid (and therefore getting its money back) as the company comes out of bankruptcy.

The following article has a good explanation of the issue and news: Yahoo Finance and AP Article on Entergy New Orleans Bankruptcy Filing.

This filing is more of a technical filing, and a pre-emptive filing, to allow ETR (the parent) to safely fund the $400-$500 million its New Orleans subsidiary is going to require to make the necessary recontruction in New Orleans from Hurrican Katrina. Currently, Entergy New Orleans has essentially zero revenue, and its cash reserves will be quickly used (if not done so already).


Source: Entergy New Orleans Declares for Bankruptcy Protection (ETR)