Calpine accused of misleading creditors

Calpine Corp., the troubled California power producer, put “false and misleading” data in one of its reorganization-plan documents, Rosetta Resources Inc. told a judge Monday, demanding that creditors get correct information.

Rosetta, an independent oil and gas company split off by Calpine in July 2005, asked U.S. Bankruptcy Judge Burton Lifland in New York to force Calpine to provide a new description of how Rosetta was formed.

“We object to approval of Calpine’s Proposed Disclosure Statement because it contains false and misleading descriptions of the Rosetta transaction,” Rosetta President and Chief Executive Charles Chambers said in the statement, referring to a document detailing the reorganization plan.

Rosetta, based in Houston, asked Lifland last week to throw out a lawsuit brought against it by Calpine in June. Calpine claimed that Rosetta fraudulently bought its assets just before the bankruptcy filing for less than they were worth.

Rosetta said the way Calpine, based in San Jose, has described Rosetta’s purchase of the oil and gas operations is inaccurate and doesn’t give creditors enough information to make a decision on whether to approve the reorganization plan.

Calpine told creditors the suit against Rosetta could bring in “hundreds of millions” of dollars to help pay their debts, according to court papers. Should the lawsuit succeed, Rosetta could be forced to pay Calpine yet-to-be-determined damages.

In its objection, Rosetta defended Calpine’s sale of the oil and gas business, saying the transaction was vetted by Friedman, Billings, Ramsey & Co. and three other investment banking firms.

Rosetta said Calpine’s decision not to sue its board of directors or its professional advisors over the sale is a contradiction that should be explained to Calpine’s creditors.

Calpine spokesman Mel Scott declined to comment on Rosetta’s allegations. He said the company still expects to exit bankruptcy protection early next year.