Calpine lost in court November 22. Just how big a loss is a question that could be answered as soon as December 1. Whenever the answer comes, it will provide some clues about the company’s viability. As news of the ruling hit, Calpine’s stock posted sharply lower as 15 million shares changed hands in 30 minutes before trading was halted. The stock sales followed reports that a Delaware judge ruled that the independent power producer improperly used proceeds from an asset sale to purchase natural gas to fuel its power plants. The court barred the company from using any more of the proceeds for that purpose. Calpine owns several gas-fired power plants in California. The ruling came in response to Calpine’s request that the court tell trustees for the company’s debt securities that they should release asset sale proceeds to the company for gas purchases. At issue was some $713 million in proceeds. Of that, the company spent $313 million; a bond trustee stopped it from spending another $400 million. The stock trading halt continued until Calpine put out a statement on the court ruling that confirmed reports. It went on to say that the remedy for the company’s indenture violation has been deferred until the company answers the second lien trustee’s counterclaims and confers with that trustee. The ruling triggered a few forecasts of bankruptcy for the debt-ridden independent power producer. But Standard & Poor’s questioned the darkest outlooks. It stated that “Calpine’s significant cash balance and its ability to generate cash from the sale of gas assets in storage should allow the company to meet the potential liquidity demands arising from the lawsuit.” Adding to investor confusion was a Calyon Securities announcement early on November 23 that it had downgraded Calpine’s stock to neutral from buy. It cut the stock’s target price to $2 from $5/share. In early trading on the day before Thanksgiving, the stock slipped to $1.01/share before steadying to close at $1.20/share. That left Calpine executives with little chance to enjoy their Thanksgiving turkey before addressing the court’s concerns. The company stated that it has to answer the counterclaims by November 28, while the relief for the violation must be addressed in submissions to be made by November 30. Replies to those submissions are due December 1.