Denbury Resources lease party asks court to enforce confirmation order

By Caroline Salls

Pittsburgh, Sept. 16 – Denbury Resources Inc. debtor Denbury Onshore, LLC unexpired lease counterparty Genesis NEJD Pipeline, LLC is asking the U.S. Bankruptcy Court for the Southern District of Texas to enforce its order confirming the Denbury debtors’ plan of reorganization, according to a motion filed Tuesday.

Genesis said Denbury sent it a private letter to it on Sept. 11 reversing their course on the previously promised assumption of its pipeline lease.

“When the debtors filed the plan, the pipeline lease claims were deemed unimpaired. When the debtors filed the plan supplement, the debtors announced that the pipeline lease would be assumed. When the debtors filed the amended plan supplement, the debtors again announced that the pipeline lease would be assumed. And, when the court entered the confirmation order, the court confirmed the plan where the pipeline lease claims were unimpaired,” the motion said.

However, Genesis said Denbury took a new position in the Sept. 11 letter, stating that it can unilaterally negate Genesis’s previous reliance on all of their claims about assumption of the lease, remove the pipeline lease from the schedule of assumed contracts and leases and alter its obligations under the lease “by misconstruing a provision thereof and electing Genesis’s remedy for Denbury Onshore’s default.”

Genesis said Denbury does not have the authority to alter the plan post-confirmation.

In addition, Genesis said the proposed new plan treatment for pipeline lease claims would force it to accept prepayment in an incorrectly calculated amount and result in Genesis losing about $50 million.

To the extent the court declines to enforce the confirmation order, Genesis said any attempt by Denbury to recharacterize the pipeline lease as anything other than an assumed lease must be addressed through an adversary proceeding, “not debtor’s unilateral decree.”

Denbury is a Plano, Tex., oil and natural gas company. The company filed bankruptcy on July 30 under Chapter 11 case number 20-33801.

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