The US Subsidiaries of Norwegian construction company, Kvaerner, and German engineering firm, Foster Wheeler, are suing Longview Power to stop the beleaguered coal plant operator from drawing on US$59 million in disputed letters of credit (L/Cs).

The subsidiaries are asking Judge Brendan Shannon in the US bankruptcy court for an injunction to stop Longview taking any action to demand and draw on the L/Cs before an arbitration case resolves the dispute.

Arbitration wrangle

Kvaerner, Foster Wheeler and another Longview contractor, Siemens Energy, have been involved in a long-running arbitration wrangle with the US coal plant operator over who is responsible for design, construction and performance deficiencies at the plant.

Longview blames the three contractors who participated in the construction of the US$2 billion plant for some of its financial problems, arguing that operational problems at the plant stem from the contractors' work.

Bypassing arbitration

The contractors deny this. They say the L/Cs were assigned to them and that Longview is trying to effectively put an end to the arbitration proceedings by obtaining permission from the bankruptcy court to draw on the L/Cs.

Earlier this month, Judge Shannon ruled that Longview cannot draw on the disputed L/Cs without further permission from the court (DC World News, 6 September 2013).

A further hearing on 7 October 2013 may review that ruling.

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