Shannon Wind: $103M Citigroup Hedge Drives Going-Concern Sale
Shannon Wind filed chapter 11 in SD Texas to sell a 204 MW ERCOT wind farm after a Citigroup hedge dispute tied to Winter Storm Uri.
Shannon Wind, LLC, owner of the 204 MW wind farm in Clay County, Texas, filed for chapter 11 protection on January 25, 2026 in the U.S. Bankruptcy Court for the Southern District of Texas. The single-asset debtor operates a merchant wind project in ERCOT and entered chapter 11 to run an expedited going-concern sale while addressing a power hedge with Citigroup Energy Inc., which the first-day declaration and final cash collateral order place at the center of the case.
The dispute traces to Winter Storm Uri, the February 2021 event that pushed ERCOT prices to the $9,000/MWh cap for several days. Shannon Wind and affiliate Flat Top Wind sued Citigroup in 2021 over storm-era hedge charges, and Citigroup now asserts roughly $108.1 million against a project carrying about $5.1 million of funded debt.
| Debtor(s) | Shannon Wind, LLC |
| Court | U.S. Bankruptcy Court, Southern District of Texas |
| Case Number | 26-90124 |
| Petition Date | January 25, 2026 |
| Primary Asset | Shannon Wind Farm (204 MW, Clay County, Texas) |
| Market Exposure | ERCOT merchant |
| Primary Secured Counterparty | Citigroup Energy Inc. |
| Cash Collateral | 13-week budget; 115% rolling variance cap; final order entered February 18, 2026 |
| Sale Hearing | June 3, 2026 |
| Judge | Hon. Alfredo R. Perez |
| Claims Agent | Verita Global (KCC) |
Expedited Sale Process and Bidding Procedures
The sale motion seeks to sell the wind project as a going concern on a fast-track schedule, with a liquidating plan to follow that would distribute proceeds. The debtor retained Nomura as investment banker and Bradley Arant Boult Cummings LLP as restructuring counsel to support the marketing process. The court approved bidding procedures on February 18, 2026 and set a sale hearing for June 3, 2026. The debtor has not named a stalking horse bidder.
The proposed milestones set a final cash collateral order within 45 days of the petition date, a bidding procedures order within 35 days, sale approval within 120 days, and a sale closing within 150 days. The first-day declaration describes the debtor as a project company that owns the wind farm and controls the site through long-term leases and easements, consolidating the operating asset and related contractual rights in a single entity for the sale.
Cash Collateral and First-Day Relief
The debtor did not seek a standalone DIP facility. The cash collateral motion requested authority to use cash collateral under a 13-week budget with a rolling four-week variance cap of 115%, and the court entered a final cash collateral order on February 18, 2026. Adequate protection for Citigroup Energy includes replacement liens on pre- and postpetition assets, superpriority claims, payment of Citigroup Energy counsel fees, and a professional fee carve-out capped at $350,000 after a trigger event.
The cash management motion describes seven active deposit accounts at Wilmington Trust and Citibank, with power sale proceeds collected by the energy manager and remitted to the debtor's operating account. The motion sought authority to keep the existing accounts, continue wire and ACH payments, and obtain a waiver of the Section 345(b) investment requirements.
The critical vendor motion identifies Consolidated Asset Management Services (CAMS), the operations-and-maintenance provider, and Tenaska Power Services Co., the project's qualified scheduling entity and energy manager, as the counterparties needed to maintain turbine availability and ERCOT scheduling. It set interim payment caps of $80,000 for critical vendor claims and $15,000 for lien claims, with proposed final caps of $110,000 and $30,000, conditioned on trade agreements requiring continued performance on customary terms.
The utilities motion proposed a deposit sized to roughly two weeks of service plus a $4,725 segregated assurance deposit, with a 20-day window for utilities to request additional assurance. The insurance motion describes property, general liability, cyber, terrorism, and D&O coverage financed through a premium finance agreement with AFCO. The debtor also sought a schedules extension.
The litigation claimant notice motion asked the court to approve specialized notice procedures for Winter Storm Uri-related claimants, routing service through counsel of record for represented parties while preserving notice for unrepresented claimants. The debtor's claims agent retention application names Verita Global (KCC) as claims and noticing agent at a $25,000 retainer with hourly rates ranging from $24 to $196, and the court entered an interim order appointing the agent.
Citigroup Hedge Claim and Capital Structure
The first-day declaration lists approximately $5.1 million in funded debt at the project level. The final cash collateral order states that Citigroup Energy Inc. asserted about $102.9 million in obligations under the power hedge agreement, with total hedge and protective advance obligations of approximately $108.1 million. Citigroup also extended a protective advance note of roughly $5 million to fund operations.
Texas wind projects often use hedges to set price floors for spot-market electricity sales. Fixed-volume swaps require a contracted quantity to be delivered or financially settled, which creates the highest exposure when output falls and prices spike — the pattern that drove the Citigroup charges during Uri. A June 2022 review reported that fixed-volume contracts have become rare since the storm, with newer structures using caps and call options to limit extreme price exposure.
Citigroup's hedge claim is secured by replacement liens and superpriority claims under the final cash collateral order, so recoveries for trade creditors and litigation claimants will depend on the sale price, the allowance of the hedge obligations, and any negotiated resolution of the Uri litigation.
Winter Storm Uri and the Citigroup Litigation
Winter Storm Uri hit Texas in February 2021 and forced rolling blackouts ordered by ERCOT, with the grid coming within minutes of system-wide failure. ERCOT held its market price cap at $9,000 per MWh for several days, a decision a June 2022 review tied to acute losses for generators with variable output settling fixed-volume hedges.
Shannon Wind and Flat Top Wind sued Citigroup in 2021, alleging that Citi billed the projects for replacement power at $9,000/MWh during the storm rather than contracted fixed-price levels. The suit asserted that Citi billed Shannon Wind $39.5 million over four days and Flat Top $79.3 million over seven days, amounts that exceeded the projects' projected annual revenues. Other reporting described the dispute as covering roughly $100 million in charges.
The state-court litigation was dismissed in February 2023, after which the debtor pursued chapter 11 as the remaining path to address the hedge obligations.
The storm produced wider litigation across the Texas power sector. In 2024 the Texas Supreme Court held that ERCOT could not be sued for blackout damages, and in 2025 it agreed to review claims against utilities over whether they can be held liable for following ERCOT directives.
Shannon Wind Farm and Sponsor History
The Shannon Wind Farm reached commercial operations in December 2015 and comprises 119 GE 1.7-103 turbines delivering power into ERCOT on a merchant basis, meaning revenues depend on wholesale prices rather than a long-term fixed-price power purchase agreement. The first-day declaration states that the debtor controls the project site through long-term leases and easements and relies on external providers for operations, maintenance, and ERCOT scheduling, which is why it sought critical vendor authority for CAMS and Tenaska.
The project was developed as a joint venture between Alterra Power and a Starwood Energy affiliate, each holding a 50% interest. In October 2017, Innergex Renewable Energy agreed to acquire Alterra Power in a C$1.1 billion deal that listed Shannon Wind among Alterra's notable assets. Alterra's Texas portfolio also included Flat Top Wind, the 200 MW project that is Shannon Wind's co-plaintiff in the Citigroup litigation.
At commercial operations, the project carried a 13-year power hedge with Citi and $219 million in tax equity funded by subsidiaries of Citi and BHE Renewables — the financial structure that placed Citigroup at the center of both the project's original financing and its later hedge dispute. As of the chapter 11 filing, the holding company's Class A equity interests were held by Citicorp North America, Inc. and MidAmerican Wind Tax Equity Holdings, LLC, with Class B interests controlled by Lotus Infrastructure Partners through Shannon Partnership Holdings, LLC.
Case Timeline
The debtor filed its chapter 11 petition on January 25, 2026 and its first-day motions the next day. The first-day orders authorize cash collateral use, critical vendor payments to CAMS and Tenaska, and the Uri claimant notice procedures while the marketing process runs toward the June 3 sale hearing.
| Date | Event |
|---|---|
| January 25, 2026 | Chapter 11 petition filed |
| January 26, 2026 | First-day motions filed (cash collateral, cash management, utilities, insurance, critical vendors, litigation notice procedures, schedules extension) |
| January 26, 2026 | Interim claims agent order entered for Verita Global |
| January 28, 2026 | First-day hearing; interim cash collateral order entered |
| February 18, 2026 | Final cash collateral order and bidding procedures order entered |
| June 3, 2026 | Sale hearing scheduled |
Frequently Asked Questions
Why did Shannon Wind, LLC file for chapter 11?
The debtor defaulted under a power hedge with Citigroup Energy Inc. and filed chapter 11 to pursue a going-concern sale while addressing hedge claims and litigation that escalated after Winter Storm Uri. The role of fixed-volume hedges during Uri is described in post-storm hedge analysis.
When did Shannon Wind, LLC file for chapter 11?
The petition was filed on January 25, 2026.
What is the case number and court?
The case is 26-90124 in the U.S. Bankruptcy Court for the Southern District of Texas.
What assets does Shannon Wind, LLC own?
The debtor owns the 204 MW Shannon Wind Farm in Clay County, Texas, which uses 119 GE 1.7-103 turbines and sells power into ERCOT on a merchant basis.
Is there DIP financing or a cash collateral order?
No standalone DIP facility was sought. The cash collateral motion requested authority to use cash collateral under a 13-week budget, and the court entered a final cash collateral order on February 18, 2026.
Who is the claims agent for Shannon Wind, LLC?
Verita Global (KCC) serves as the claims and noticing agent per the interim retention order. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
For more bankruptcy case coverage, visit the ElevenFlo bankruptcy blog.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
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