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(Adds details from ruling and background)
By Tracy Rucinski
Dec 14 (Reuters) - A leading U.S. subsidiary of Abengoa SA received U.S. court approval to exit its Chapter 11 bankruptcy, according to court records filed on Wednesday, putting the Spanish renewable energy group closer to achieving a global debt-cutting plan.
Abeinsa Holding Inc was one of dozens of U.S. Abengoa subsidiaries that filed for U.S. bankruptcy protection while the Seville-based parent worked out a high-stakes plan to cut $10 billion of debt and avoid its own bankruptcy in Spain.
"It is both relevant and consequential that confirmation of the (Abeinsa) plan is a material component, and a condition, of the global restructuring of the Spanish companies," U.S. Bankruptcy Judge Kevin Carey said in a written ruling.
Under Abengoa's so-called master restructuring agreement, big bank lenders such as Santander will take equity in exchange for debt in the family-founded engineering company that invested heavily to finance a quick expansion in global renewable energy.
As part of the U.S. reorganization, Abengoa will retain its control of the U.S. businesses, which range from engineering and construction firms to biofuel and solar energy plants, thanks to a $23 million cash payment by its new bank owners.
Abengoa will also put funds into a litigation trust to resolve potential lawsuits and a separate reserve pool for potential insurer claims.
Carey overruled objections to the plan by Portland General Electric, which had sued Abengoa over alleged cost overruns and construction defects at a power plant in Oregon, and by the U.S. Trustee, a government bankruptcy watchdog.
While Carey agreed with the U.S. Trustee's concern that lawsuit shields provided to Abengoa and affiliated parties were overly broad, he said there was "no doubt that the plan before me is part of the overall restructuring of the Abengoa group."
Though U.S. creditors will recover only pennies on every dollar of debt, Carey said the reorganization plan offered a better outcome that an outright liquidation.
Abengoa's global debt restructuring agreement has received support from shareholders and the Spanish court, though several creditors are still challenging the court validation in Spain. (Additional reporting by Tom Hals in Wilmington, Delaware; Editing by Jonathan Oatis, James Dalgleish and Bernard Orr)