Appaloosa Management, the hedge fund founded by David Tepper, has started accumulating a position in the Energy Holdings Corp debt, people familiar with the matter told the Financial Times. The Texas-based power producer has a total debt of over $46 billion.

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Though most other hedge funds have purchased the most senior debts of the company, Appaloosa Management has bought riskier, junior debt, betting that the Dallas, Texas-headquartered company won’t file for a Chapter 11 bankruptcy anytime soon. The Energy Future Holdings Corp. was acquired by Goldman Sachs Group, Inc. (NYSE:GS), TPG Capital LP and KKR & Co. L.P. (NYSE:KKR) in 2007 for about $48 billion.

The deal was financed with $8 billion in equity and $40 billion in debts. In the past six years, the debts swelled to $46 billion as the group led by TPG Capital decided to restructure the terms of the debts and extend the maturity to get some more time to keep the company alive. The debts of the company increased to about nine times its EBITDA.

Recently, the company’s creditors rejected a pre-packaged bankruptcy offer. Terms of the deal required them cancel all debts, and receive an unknown amount of equity in the parent company plus $5 billion in cash.

The debts Appaloosa Management has been accumulating currently, trade at about 20 cents on the dollar, and have a yield of 15 percent, people familiar with the matter told the Financial Times. David Tepper is estimated to have bought debt with a face value of $500 million for $100 million.

Appaloosa Management is one of the most successful hedge funds. Last year, it gave an after-fee annual return of 30 percent, something the hedge fund has been doing since its inception in 1993. Last year, Tepper earned $2.2 billion to top the list of 25 highest hedge fund managers in 2012, earning more than Ray Dalio of Bridgewater Associates.