Nearly every day a different E&P company makes an announcement that indicates the company is facing financial distress, insolvency or bankruptcy. Many of these companies are Operators under Joint Operating Agreements and with each announcement there are likely Non-Operators concerned about the impact these events will have on their non-operated working interests. Non-Operators should understand their JOA rights and options when their Operator becomes distressed.
A Chicago bankruptcy court declined to dismiss the Chapter 11 case of a “bankruptcy remote” limited liability company even though the debtor failed to obtain the unanimous consent of its members as required by its operating agreement. See In re Lake Mich. Beach Pottawattamie Resort, LLC, Case No. 15bk42427, 2016 Bankr. LEXIS 1107 (Bankr. N.D. Ill. April 5, 2016).
On remand by the First Circuit Court of Appeals, the Federal District Court of Massachusetts found Sun Capital Partners III, LP (“Sun Fund III”) and Sun Capital Partners IV, LP (“Sun Fund IV, and together with Sun Fund III, the “Sun Funds”) liable for the withdrawal liability of Scott Brass, Inc.
Challenges, Risks and New Developments in the Distressed Oil & Gas Industry MARK A. PLATT, Partner 214 932 6433 | [email protected] Dallas, TX JOHN H. THOMPSON, Partner 202 857 2474 | [email protected] Washington, DC The authors thank the following colleagues for their assistance with this material: Courtney A.
Today, the Second Circuit reissued the latest in a line of cases adopting an expansive reading of the safe harbor under Section 546(e) of the Bankruptcy Code. In re Tribune Co. Fraudulent Conveyance Litig., Case 13-3992, Doc. 356-1 (2d Cir. Mar. 29, 2016). (This opinion was originally issued on March 24 and withdrawn on March 28. The opinion released today contains minor, non-substantive alterations to the text on pages 8, 22, 26, and 40. In all other respects, it is identical to the opinion withdrawn last week).
This alert describes certain information regarding the recently filed bankruptcy case of Emerald Oil, Inc. and is an example of current developments in the energy industry.
Emerald Oil, Inc. and its subsidiaries (collectively referred to as the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code on March 22, 2016 in the District of Delaware, pursuant to which the Debtors plan to sell substantially all of their assets (the “Assets”) in a possible auction in July 2016.
In a case of first impression, the Seventh Circuit recently issued an opinion that may cause landlords and their advisors to re-evaluate the consequences of terminating a financially distressed commercial tenant’s lease prior to bankruptcy. Official Comm. of Unsecured Creditors of Great Lakes Quick Lube LP v. T.D. Investments I, LLP (In re Great Lakes Quick Lube LP), --- F.3d ---, 2016 WL 930298 (7th Cir. Mar. 11, 2016) (Posner, J.).
Can Gathering Agreements Be Rejected as Executory Contracts?
With the steep collapse of oil and gas prices in the last eighteen months, dozens of exploration and production companies have declared bankruptcy and many more companies are expected to file for bankruptcy protection unless prices rebound dramatically. As the prospect of further bankruptcies looms, it is important for parties to understand how to adequately protect their security interests and the nature of competing liens that could prevent them from fully realizing on the value of the collateral securing their counterparty’s obligations.
Courts agree that bankruptcy trustees control bankrupt companies' attorney-client privilege. It is easy to underestimate this basic principle's strength.