When Milbank, Tweed, Hadley & McCloy snagged the role as creditors committee counsel in the Pacific Gas & Electric Company bankruptcy this spring, it was a coup for the New York firm. To win the high-profile-and surely lucrative-assignment, it had to beat five competitors. But to hook up with its new client, the firm had to go through an ugly divorce: Milbank abruptly severed ties with one of the central players in California’s energy scheme.
Long before the phrase “California energy crisis” became a daily headline, Milbank had been involved in the state’s ambitious deregulation project as principal counsel to the California Power Exchange. The nonprofit Exchange,which began operating in 1998, ran the now-maligned auctions where power was bought and sold. L.A. partner Edwin Feo worked closely with the Exchange from the start, giving advice on many aspects of its operations and attending most board meetings, according to two Exchange officials. As the state’s power situation began going haywire late last year, Milbank insolvency specialist Robert Moore counseled the Exchange about a possible bankruptcy filing.
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