<p>Energy trader and producer Mirant Corp. has authorized a lawsuit against Southern Co., the former parent that spun Mirant out as a separate public company in 2001.</p><p>According to a report Atlanta-based Mirant filed Friday in a Texas bankruptcy court, a special committee of its board investigated a series of payments from Mirant to Southern and concluded legal action was warranted.</p><p>The report, a revised disclosure statement outlining Mirant's Chapter 11 plan for those entitled to vote on it, said the lawsuit will be transferred to a trust that will be set up to collect money for creditors.</p><p>Payments to be targeted in the lawsuit total more than $1.9 billion and date back to the time just prior to Mirant's launch as a standalone public company.</p><p>The disclosure statement doesn't spell out the premise for the lawsuit. But it does refer to a probe of Mirant's solvency at the time of a series of payments from the fledgling public company to its parent.</p><p>Under the bankruptcy code, payments from a financially weakened company to a parent company or insider can be unwound.</p><p>Mike Tyndall, a spokesman for Southern, said the company is reviewing the papers and will issue a statement soon.</p><p>Financial ties between a healthy parent and ailing ex-subsidiary have been the source of litigation in other high-profile bankruptcy cases, including those of Paragon Trade Brands Inc. and the former Vlasic Foods International Inc.</p><p>An Atlanta judge has already found Paragon's one-time parent Weyerhaeuser Co. liable for failing to warn of big risks attached to looming patent problems at the time it spun its private label diaper business out as a public company in 1993.</p><p>Atlanta-based Mirant filed the 11th-largest bankruptcy of all time when it sought protection July 14, 2003, listing assets of $20.57 billion and consolidated debts of $11.4 billion.</p><p>Southern, the parent of several utilities, is based in Atlanta.</p>
