Cox Oil committee, DIP lenders work together to formulate plan

By Sarah Lizee

Olympia, Wash., Oct. 31 – Cox Oil Offshore, LLC’s official committee of unsecured creditors objected to the company’s motion seeking an extension of its exclusive plan periods, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company asked the court to extend the exclusive plan filing period by 90 days through Dec. 11 and the exclusive solicitation period by 90 days through Feb. 8.

Cox Oil and W&T Offshore, Inc. reached an impasse regarding the proposed sale of various oil and gas interests, and the debtors are now “pivoting to a different path” involving a plan, counsel for the debtor said at a status conference held Oct. 19.

The debtors’ counsel also noted that the committee had already sent a plan term sheet that all parties were working through.

At the status conference, the committee said the debtors’ existing management – bidders for various estate assets and targets of the estates’ most valuable litigation claims and causes of action – would undermine the time-sensitive task of formulating a consensual plan.

The committee said that since the status conference, the committee and the debtor-in-possession lenders have been working on a viable plan construct, for discussion with holders of administrative claims, statutory lien claims, and the United States.

The committee and the DIP lenders have exchanged draft term sheets, met with potential replacement oil and gas operators, and considered possible funding options.

“The debtors have had no role in these discussions,” the committee said in the objection.

“The committee’s actions are driven not only by the estates’ dwindling liquidity and the substantial cost of the cases, but also by the concern that the debtors will not prosecute a plan unless it preserves value for, or grants releases to, existing management and equity.

“Any such plan would lack stakeholder support.”

The committee said that any “cause” to extend exclusivity that may have existed when the debtors filed the motion in early September no longer exists.

“The debtors are no longer focused on the sale process, mired in unanticipated litigation, or absorbed in determining the priority of statutory liens on estate assets as a predicate to proposing a plan,” the committee said.

The group said that authorizing the committee and the DIP lenders to file a plan will prevent any misuse of exclusivity and empower creditors to develop consensus.

The Dallas-based drilling company filed bankruptcy on May 14 under Chapter 11 case number 23-90324.

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