⛽️New Chapter 11 Bankruptcy Filing - Arsenal Energy Holdings LLC⛽️

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Arsenal Energy Holdings LLC

February 4, 2019

This is the week of proposed super-short bankruptcy cases.

Pennsylvania-based natural-gas developer, Arsenal Energy Holdings LLC, filed a prepackaged bankruptcy case in the District of Delaware. Pursuant to its prepackaged plan of reorganization, the company will convert its subordinated notes to Class A equity. Holders of 95.93% of the notes approved of the plan. The one holdout — the other 4+% — precipitated the need for a chapter 11 filing. Restructuring democracy is a beautiful (and sometimes wasteful) thing.

100% of existing equity approved of the plan and will get Class B equity (with the exception of Arsenal Resource Holdings LLC and FR Mountaineer Keystone Holdings LLC, which will both get Class C equity).

The company, itself, is about as boring a bankruptcy filer as they come: it is just a holding company with no ops, no employees and, other than a single bank account and its direct and indirect equity interests in certain non-debtor subs, no assets. The equity is privately-held.

More of the action occurred out-of-court upon the recapitalization of the non-debtor operating company. Because of the holdout(s), the company, its noteholders, the opco lenders (Mercuria) and the consenting equityholders agreed to consummate a global transaction in steps: first, the out-of-court recap of the non-debtor opco and then the in-court restructuring of the holdco to squeeze the holdouts. For the uninitiated, a lower voting threshold passes muster in-court than it does out-of-court. Out-of-court, the debtor needed 100% consent. Not so much in BK.

Given the simplicity of this case, the company hopes to be in and out of bankruptcy in less than two weeks. Which, considering the effort in FULLBEAUTY, begs the question: why is it taking so long?

  • Jurisdiction: D. of Delaware

  • Capital Structure: $861mm subordinated notes, $116.7mm Seller Notes

  • Company Professionals:

    • Legal: Simpson Thacher & Bartlett LLP (Michael Torkin, Kathrine McLendon, Nicholas Baker) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Kara Coyle, Ashley Jacobs)

    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)

  • Other Parties in Interest:

    • Ad Hoc Group of Subordinated Noteholders

      • Legal: Cleary Gottlieb Steen & Hamilton LLP (Sean O’Neal, Humayan Khalid)

    • Mercuria Investments US, Inc.

      • Legal: Vinson & Elkins LLP (David Meyer, Garrick Smith)

New Chapter 11 Filing - Augustus Energy Resources LLC

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3/16/18

Augustus Energy Resources is a privately-owned natural gas E&P company based in Billings, Montana; its primary assets are operating and non-operating working interests in approximately 1575 natural gas wells in eastern Colorado, the aggregation of which arises out of various acquisitions from Berry Petroleum Company and Rosetta Resources. 

The company filed for bankruptcy because the collapse in the market price of natural gas left it in a position where it couldn't (i) devote the capital necessary to maintain and grow its business, (ii) service its balance sheet and (iii) get access to credit. Indeed, the falling natural gas price led to multiple redeterminations of the borrowing base in the company's Wells Fargo-provided senior secured credit facility. Moreover, the company became the subject of a class action lawsuit accusing it of improperly charging royalty owners of certain post-production processing and transportation costs. This complicated an attempted out-of-court sale process of the company.

The company has filed for bankruptcy, therefore, to pursue a sale to a proposed stalking horse bidder, OWN Resources Inc. 

  • Jurisdiction: D. of Delaware 
  • Capital Structure: $14.4mm debt (Wells Fargo Bank NA)    
  • Company Professionals:
    • Legal: Davis Graham & Stubbs LLP (Christopher Richardson, Thomas Bell, Kyler Burgi) & (local) Sullivan Hazeltine Allinson LLC (William Sullivan, William Hazeltine)
    • Investment Banker: TenOaks Energy Advisors LLC
    • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Sponsor: Kayne Anderson Capital Advisors LP 
  • Wells Fargo Bank NA
    • Legal: Vinson & Elkins LLP (William Wallander, Matthew Pyeatt) & (local) Womble Bond Dickinson (US) LLP (Ericka Johnson, Morgan Patterson)
  • Stalking Horse Bidder: OWN Resources Inc.
    • Legal: Husch Blackwell LLP (Lynn Butler)