Shannon Wind, LLC filed for Chapter 11 bankruptcy protection on January 25, 2026, in the United States Bankruptcy Court for the Southern District of Texas, seeking to sell its 204.1 megawatt wind farm through a court-supervised process after being unable to satisfy approximately $102.9 million in obligations to Citigroup Energy Inc. stemming primarily from the 2021 Winter Storm Uri. The company has $5.1 million in funded debt and has operated since December 2015. The debtor states it filed due to shortfalls created when weather conditions and regulatory price increases during the February 2021 storm resulted in obligations at prices reaching $9,000 per megawatt-hour.
Company Background and Business Operations
Shannon Wind owns a 204.1 megawatt wind farm located in Clay County, Texas, in the North Texas region known for strong wind resources. The facility consists of 119 General Electric 1.7-103 wind turbines and began commercial operations in December 2015. The project feeds power into the Electric Reliability Council of Texas grid and connects via transmission lines managed by Oncor Electric Delivery Co.
The company is wholly owned by Shannon Wind Holdings, LLC, which has Class A "tax equity" interests owned by Citicorp North America, Inc. and MidAmerican Wind Tax Equity Holdings, LLC, while Class B interests are owned by Shannon Partnership Holdings, LLC, ultimately controlled by Lotus Infrastructure Partners, a private equity firm focused on energy infrastructure investments.
Shannon Wind operates without employees, relying instead on independent contractors and service providers. GE Vernova International LLC provides operation, monitoring, and maintenance services for the wind turbine generators. Consolidated Asset Management Services provides administrative and asset management services, while Tenaska Power Services Co. acts as the exclusive qualified scheduling entity and energy manager, handling all operational functions with ERCOT and marketing the project's production.
The Energy Hedge Structure and Original Financing
On June 29, 2015, the debtor entered into two key agreements with Citigroup Energy Inc.: the Energy Hedge Agreement - Power and the Energy Hedge Agreement - REC and Capacity. Under the power hedge agreement, Shannon Wind was required to provide a fixed quantity of electricity in exchange for a fixed price of $26.20 per megawatt-hour. The company continues to sell Renewable Energy Certificates generated by the project to CEI at a fixed rate of $0.75 per REC.
The same day, the debtor entered into a Construction Credit Agreement with Citibank providing construction loans not to exceed $212,245,700 along with letter of credit facilities. These obligations were secured by substantially all of the debtor's assets. Shannon Wind satisfied all obligations under the construction facility in December 2015, after which the energy hedge agreements became secured by a first priority lien against substantially all company assets, as well as a pledge of the parent company's membership interests in the debtor.
Like many renewable energy generators, Shannon Wind executed these hedge agreements to lock in predictable cash flow and reduce merchant price risk.
Winter Storm Uri and Its Impact
In February 2021, Texas experienced extreme conditions during Winter Storm Uri, including freezing temperatures and dangerous weather that prompted state and federal disaster declarations and caused widespread power outages. The wind turbines at the Shannon Wind facility suffered significant blade icing that impeded energy production during the storm.
As a result of the storm conditions and widespread outages, ERCOT and the Public Utility Commission of Texas issued orders that raised the market price of electricity to the regulatory ceiling of $9,000 per megawatt-hour. The price increase was intended to reflect the scarcity of supply, incentivizing generators capable of adding supply to do so and encouraging large industrial users to reduce demand. The elevated pricing remained in place for approximately four days.
Because Shannon Wind was producing little or no energy due to the blade icing, the company could not fulfill its obligations to deliver electricity at the fixed hedge price of $26.20 per megawatt-hour. Instead, under the terms of its hedge agreements, the debtor became liable to purchase the required electricity at the regulatory ceiling price of $9,000 per megawatt-hour.
Facing these circumstances, Shannon Wind issued notices to CEI asserting a force majeure event that would excuse its obligations under the energy hedge agreements. However, on March 11, 2021, CEI issued an invoice to Shannon Wind in the amount of $39,486,641.34, calculated primarily based on alleged delivery shortfalls at or by reference to the imposed $9,000 per megawatt-hour pricing during Winter Storm Uri.
Litigation Over Force Majeure and Hedge Obligations
Shannon Wind disputed CEI's invoice but did not have sufficient cash to satisfy the demand for payment. Following the debtor's failure to pay, CEI issued notices of default.
In April 2021, Shannon Wind and its parent company sued CEI in the District Court of Harris County, Texas. In the state court litigation, the companies sought declaratory judgments that Shannon Wind was excused from performing its obligations under the energy hedge agreements due to force majeure, that CEI's $39 million invoice was not calculated properly, that the invoice constituted an unenforceable penalty, that there was no event of default under the agreements, and that CEI's notice of default was not valid. The debtor also asserted a breach of contract claim against CEI.
Given the deadlines in CEI's demands, Shannon Wind requested a temporary restraining order and injunction to stop any enforcement actions pending resolution of the disputes. The state court granted a temporary restraining order but denied the request for a preliminary injunction. The debtor's lawsuit against CEI was ultimately dismissed in February 2023.
Cash Sweep and Failed Negotiations
During the Texas state court litigation, CEI issued additional notices of default to Shannon Wind under the power hedge agreements. On April 13, 2022, CEI exercised remedies under its collateral documents to direct Citibank, as first lien collateral agent, to deliver an account stop notice and take other actions, which resulted in a cash sweep of the collateral accounts totaling approximately $14 million in partial satisfaction of the outstanding amounts.
Following CEI's notices of default, CEI, Citibank, and principals of Lotus engaged in negotiations over the course of several years to resolve the debtor's obligations, including dozens of discussions and exchanges regarding amounts owed and proposals to satisfy the debt. However, the parties never reached agreement on an actionable plan to resolve the dispute.
Appointment of Chief Restructuring Officer and Independent Manager
On September 16, 2025, CEI exercised remedies under its collateral documents to direct Citibank to cause Shannon Wind to approve amendments to the debtor's operating agreement, execute an engagement letter with Accordion Partners, LLC, and retain a chief restructuring officer. The CRO has been focused on day-to-day operations of the project, communicating with stakeholders, and ensuring the company has sufficient cash for operations while considering strategic and financial restructuring alternatives, including a potential sale.
On November 5, 2025, Shannon Wind and CEI entered into a Senior Secured Promissory Note (the Protective Advance Note) to fund the business and operations of the debtor. The obligations under this note total approximately $5 million and are secured by a first-priority lien against substantially all assets of the debtor on a pari passu basis with the lien securing obligations under the energy hedge agreements.
On January 22, 2026, CEI exercised remedies to cause the parent company to appoint an independent manager for Shannon Wind through Redbud New Energy, LLC. The independent manager 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, including experience with project-financed assets and matters involving hedging strategies, covenant compliance, and liquidity management in volatile commodity markets.
Capital Structure at Filing
As of the petition date, Shannon Wind's obligations to CEI totaled approximately $108.1 million, consisting of approximately $102.9 million under the Energy Hedge Agreement - Power and approximately $5.1 million under the Protective Advance Note, exclusive of accrued and accruing professional fees and expenses. These obligations are secured by substantially all of the debtor's assets and a pledge of the parent company's membership interests.
Shannon Wind currently has full merchant exposure for its electricity production. Effective September 17, 2025, CEI terminated the Energy Hedge Agreement - Power due to the debtor's failure to satisfy its obligations, though the company continues to sell Renewable Energy Certificates to CEI under the separate REC and capacity agreement.
The Proposed Sale Process
Prior to the petition date, Shannon Wind engaged Nomura Securities International, Inc. as investment banker to assist in the marketing and sale of the debtor or its assets. This process is in early stages, and the company does not have a binding offer from a proposed buyer.
According to the first day declaration, a bankruptcy sale process represents the most efficient means of pursuing a sale free and clear of all claims against the debtor and its assets, thereby maximizing value for all stakeholders. The company is targeting a sale closing within 150 days after the petition date, with a liquidating plan of reorganization or other appropriate relief to follow.
The debtor will be filing a bid procedures motion requesting court approval of the marketing and sale timeline. The company believes this expedited sale process is necessary to bring the Chapter 11 case to a successful conclusion.
First Day Relief Requested
Shannon Wind filed six first day motions seeking various forms of relief intended to stabilize business operations, facilitate efficient administration of the Chapter 11 case, and expedite the restructuring:
Cash Collateral Motion: The debtor seeks authorization to use cash collateral to maintain operations during the bankruptcy case. Shannon Wind and CEI have agreed upon an initial 13-week budget setting forth expected material cash receipts and disbursements. Without approval to use cash collateral, the company would be forced to shut down operations, which would be value destructive and harmful to all interested parties.
Cash Management: Authorization to maintain existing cash management system and honor certain prepetition obligations related thereto, with waivers of certain operating guidelines and suspension of time to comply with Section 345(b) of the Bankruptcy Code.
Utilities: Approval of the debtor's proposed form of adequate assurance of payment to utility companies, establishment of procedures for resolving objections, and prohibition on utilities altering, refusing, or discontinuing service.
Critical Vendors and Lien Claims: Authorization to pay critical vendor claims and lien claims to maintain essential business relationships and operations.
Insurance: Authorization to continue existing insurance policies and pay all obligations with respect thereto to maintain coverage without interruption.
Extension of Time: Extension of time to file schedules and statements of financial affairs.
Litigation Notice Procedures: Approval of notice procedures for litigation claimants and form of notice of commencement of the case.
According to the first day declaration, the relief requested in these motions is necessary to enable Shannon Wind to transition into Chapter 11 with minimal disruption or loss of productivity and value. Without this relief, the company's business and estate would suffer immediate and irreparable harm.
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