July 29, 2026 – At a first-day hearing held Wednesday, the Court authorized Omnis Pleasants, LLC (“Pleasants” or the “Debtor”) to use cash collateral on an interim basis and approved the balance of the Debtor’s first-day relief over objections from Omnis Fuel Technologies, LLC and Quantum Pleasants, LLC, which challenged the authority to commence the case and urged dismissal.

The interim order permits continued operation of the 1,278-megawatt Pleasants Power Station while the Debtor pursues a sale and investigates alleged misconduct by former management, including circular transfers and suspect invoices used to support $50.0mn of state financing, together with affiliate transactions tied to an uncommercialized hydrogen project and proposed cryptocurrency-mining operation. The Court also approved relief concerning utilities, taxes, insurance, employee obligations, cash management, critical vendors and hedging, while leaving governance, payoff and dismissal disputes for later proceedings.

From the Courtroom

Judge Karen B. Owens authorized Omnis Pleasants, LLC to use cash collateral on an interim basis and approved other first-day motions, generally on an interim basis, including relief concerning utilities, taxes and fees, insurance and surety bonds, employee obligations, cash management, critical vendors and hedging, together with the appointment of Stretto, Inc. as claims and noticing agent. Owens rejected an effort by Omnis Fuel Technologies, LLC and Quantum Pleasants, LLC to block the relief while preserving their ability to pursue dismissal and litigate who had authority to commence the case. “I reject the offer to sua sponte dismiss these cases today,” Owens said. She declined to decide the governance dispute on the first-day record and limited admission of chief executive David J Hindman’s First Day Declaration [Docket No. 10] to the motions then before her.

Alexander Woolverton of Herbert Smith Freehills Kramer (US) LLP said the Debtor’s 1,278-megawatt West Virginia coal plant should be capable of profitable ordinary-course operations, but entered chapter 11 after prior management allegedly diverted capital toward affiliated projects, operational conditions deteriorated and a restructuring impasse developed. He said independent management had stabilized the plant and entered advanced negotiations for a sale that the Debtor expected would repay creditors in full and provide a return to equity. “The plant’s basic operational integrity was compromised,” Woolverton said of the earlier period, while cautioning that the Debtor’s investigation remained ongoing.

Christopher A. Ward of Lowenstein Sandler LLP, appearing for Omnis Fuel Technologies and Quantum Pleasants, argued that the chapter 11 case had improperly displaced a governance and payoff dispute already being litigated in the Circuit Court of Pleasants County, West Virginia. The Objecting Parties commenced that action and, on July 8th, sought a temporary restraining order and preliminary injunction preventing TRAG LLC and RG Energy LLC (“RGE”) from exercising remedies until seven days after providing a complete payoff statement and restricting independent manager Gilbert Nathan’s authority pending access to financial information and Quantum’s leased premises. The state court denied that relief on July 9th.

After TRAG and RGE circulated a July 15th restructuring term sheet identifying $75.64mn as the aggregate outstanding obligation, Dynamic Finance Corporation delivered a check in that amount to lender counsel on July 16th. The Objecting Parties contend that the tender paid the lenders in full, terminated the February 2026 forbearance agreement and permitted Quantum, the Debtor’s sole equity owner, to remove Nathan and appoint Charles Gassenheimer as interim director on July 20th. The lenders rejected the check, and Nathan allegedly declined to approve the financing as a related-party transaction.

TRAG and RGE then filed counterclaims and sought their own temporary restraining order and preliminary injunction on July 21st, seeking to preserve Nathan’s position and prevent the Objecting Parties from exercising governance control. The state court denied that relief on July 24th, and the Debtor filed for chapter 11 protection on July 26th. No full merits hearing had been scheduled in the West Virginia action as of the bankruptcy hearing. Ward characterized the Petition as an attempt to use the automatic stay and Bankruptcy Court jurisdiction as substitutes for relief the lenders failed to obtain in West Virginia. “We needed a venue to deal with these issues, and that was the West Virginia State Court,” he said, adding that the Objecting Parties intended to pursue dismissal, Rule 2004 discovery and potentially stay relief to continue the state-court litigation.

“This chapter 11 case was never needed,” Ward argued. “There’s no financial distress here.” He pointed to approximately $13.0mn of Petition Date liquidity, challenged Nathan and Hindman’s authority to authorize the Petition and criticized the projected case cost. “If this is a sale case, $11.0mn in professional fees seems pretty egregious to me,” Ward said. He also denied that the Objecting Parties were responsible for the alleged operational misconduct, noting that TyrEnergy, LLC and PurEnergy Management Services LLC served as the plant’s independent energy and asset managers during the relevant period and remained in place after Nathan and Hindman’s appointments.

Jeffrey Garfinkel of Buchalter, appearing for Kuro Infrastructure Delaware as successor by merger to Bilt Technology, disputed Ward’s contention that the Debtor lacked financial distress. Garfinkel said Kuro had loaned $20.0mn directly to Pleasants in March 2025, that the obligation remained in default and that Kuro anticipated seeking membership on any official creditors’ committee. “Clearly, this Debtor has financial distress because it hasn’t paid back my client,” he said.

Ward described an aggressive litigation response, saying his firm was preparing a motion to dismiss the case, a motion to appoint a chapter 11 trustee and requests for Rule 2004 discovery in response to the Debtor’s requested relief. He also suggested that they may file a motion for relief from the automatic stay.

Kristine Manoukian of DLA Piper LLP (US), appearing for TRAG and RGE, said the lenders “take significant issue with the characterizations around the payoff” and maintained that they remained owed more than $80.0mn. She said loans made between May 2023 and March 2025 financed the acquisition and operation of the power station and were secured by first-priority liens on the Debtor’s assets. Manoukian called the cash-collateral relief “amply justified” and argued that the governance and payoff disputes could be addressed in West Virginia or through later bankruptcy proceedings without preventing the plant from operating. “Our clients are probably the largest aggrieved party in this entire situation,” she said, “and certainly no one wanted to be in this court today.”

Woolverton said substantially all of the Debtor’s assets, including the plant and coal inventory, were encumbered and unavailable for operations absent lender consent or Court authorization. “You can’t operate a business unless it has access to its collateral,” he said, adding that every negotiation with TRAG and RGE “has been hard fought.” Owens recessed the hearing while the parties reviewed a further redline; when they returned, counsel reported that they had “closed the gap materially.”

The remaining disputes concerned the treatment of adequate protection if a lien challenge succeeded, whether a subsequently appointed chapter 7 or chapter 11 trustee would be bound by the Debtor’s stipulations and a separate claimant’s asserted entitlement to emissions allowances. Benjamin Hackman of the Office of the U.S. Trustee sought language protecting an appointed trustee. “I think I understand what you are asking,” Owens told Hackman, “but I think it may be larger in scope than what I usually hear on this issue.” She said the parties appeared to agree that a trustee would not be bound by the Debtor’s stipulations and left another requested determination for the final hearing. The parties also agreed that the interim order would not decide entitlement to the emissions allowances.

Ward maintained that “we don’t think any adequate protection is appropriate under the circumstances” and objected that the proposed business-judgment finding went unusually far for an interim cash-collateral order. Owens responded that the provision was a finding of the Court, not a Debtor stipulation. “We can get into this academic argument that you’re about to get into,” she told Ward, before noting that no evidentiary record had been presented to rebut the First Day Declaration. She overruled the objection and directed the parties to submit the revised order. “The cash is encumbered and the Debtor needs to use it to operate its business,” Owens ruled, “so it is necessary and appropriate.”

Also at Wednesday's hearing, James C Diver of Young Conaway Stargatt & Taylor, LLP presented the application to appoint Stretto, which Owens approved. Michael C. Blackmon of Herbert Smith Freehills Kramer presented the utility and tax motions; Melissa Mertz presented the insurance, surety-bond and employee-obligations motions; and Katharine E. Scott presented the cash-management and critical-vendor motions. Owens approved each request, including authority to pay up to $3.27mn of critical-vendor, lienholder and section 503(b)(9) claims on an interim basis; the motion seeks a $4.02mn final cap.

Andrew Pollack of Herbert Smith Freehills Kramer presented the hedging motion, explaining that the arrangements would help keep the generating units online and avoid associated costs. Owens remarked that the request was unusual for a first-day hearing and questioned whether the relief was necessary, but approved it on an interim basis. “I look forward to seeing you at the next hearing,” she said.

Allegations of Fraud and Mismanagement

Pleasants is wholly owned by Quantum Pleasants, whose membership interests are held by TRAG LLC and affiliate Robbins Research International, Inc. (collectively 51.23%), Omnis Fuel Technologies (43.77%) and Angela Sabella’s Harmony Trust (5.0%). Omnis Fuel Technologies and Quantum Pleasants are the Objecting Parties, while TRAG and RGE are lenders that advanced more than $80.0mn to upstream Pleasants entities between 2023 and 2025 to finance the plant’s acquisition and operations. Although those loans were initially made at the parent level, Pleasants granted TRAG and RGE first-priority liens on substantially all of its assets under a February 2026 amended forbearance agreement.

The Debtor alleges that former chief executive Simon Hodson and affiliated entities directed capital and plant resources toward an uncommercialized coal-to-hydrogen technology known as the “Reformer” while the power station’s operating condition deteriorated. According to Hindman’s declaration, the technology was represented as approaching commercialization, but technical progress stalled and the project increasingly served as a fundraising platform involving demonstrations and tours for investors, lenders, government officials and regulators. Plant employees allegedly supported the project without compensation to the Debtor while labor and capital were diverted from generating operations.

The principal financing allegations involve a $50.0mn loan provided by the West Virginia Economic Development Authority to Quantum Pleasants for the Reformer pilot project and guaranteed by the Debtor. Quantum was required to make dollar-for-dollar qualifying expenditures before obtaining matching disbursements. The Debtor alleges that funds were circulated from Omnis Fuel Technologies to Hodson-controlled StarSource, LLC and then returned, with only the outbound transfers presented to WVEDA and the West Virginia State Auditor’s Office as qualifying expenditures. WVEDA had disbursed the full $50.0mn by June 2024.

Hindman also identifies more than $114.0mn of allegedly suspect invoices issued by Industrial Accessories Company, including four invoices totaling approximately $100.6mn submitted in support of matching-fund requests. Although the invoices stated that the contractor had received a $50.0mn advance from Quantum, the Debtor says it identified less than $4.2mn of actual payments. Approximately $39.6mn of WVEDA-disbursed funds were transferred directly to contractor accounts, according to the declaration, but neither the contractor nor prior management provided what the Debtor considered a meaningful accounting. WVEDA declared defaults in July 2025, including for alleged misuse of proceeds.

The Debtor separately challenges a March 26, 2025 power-purchase agreement with Element H Data, LLC, a Hodson affiliate formed that day, for a proposed behind-the-meter cryptocurrency-mining project. The agreement capped the price paid to Pleasants at $30.54 per megawatt-hour and purported to commit 1,300 megawatts—more than the plant’s output and capacity already committed to PJM—despite internal analyses projecting losses exceeding $1.0bn over the agreement’s initial and extension terms. After Bilt Technology LLC transferred approximately $22.249mn to Pleasants in connection with a related arrangement, the Debtor incurred a $20.0mn repayment obligation and transferred $20.0mn to Omnis Fuel Technologies the same day at Hodson’s direction.

The February 2026 agreement marked the breakdown of the earlier relationship among the parties. Following defaults under the TRAG/RGE loans, the lenders agreed to continue forbearing from remedies in exchange for liens and governance changes that installed Gilbert Nathan as the Debtor’s independent manager and sole director and David Hindman as chief executive. Simon Hodson and other former officers were removed, and Nathan and Hindman were given authority to stabilize operations and pursue a sale. The current dispute centers on whether a subsequent attempted payoff terminated those protections and restored Quantum’s ability to replace Nathan and retake control.

Woolverton said coal inventory fell from approximately 200,000 tons in September 2023 to 26,000 tons by June 8, 2024 and fewer than 2,000 tons by August 2025, while vendors went unpaid and loans entered default. The Objecting Parties deny responsibility for those conditions and emphasize that independent third-party managers retained day-to-day energy and asset-management responsibilities throughout the relevant period.