PostRock trustee granted final court approval of cash collateral use

By Caroline Salls

Pittsburgh, May 11 – PostRock Energy Corp.’s Chapter 11 trustee received final court approval to use the cash collateral of the company’s pre-bankruptcy lenders to fund its operations while in bankruptcy, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Western District of Oklahoma.

The cash collateral use is scheduled to terminate at 12:59 a.m. ET on July 9.

As previously reported, PostRock’s official committee of unsecured creditors official committee of unsecured creditors objected to the cash collateral use in that it “not only fails to provide the debtors with sufficient liquidity to operate a fulsome [sale] process, but also unduly restricts the trustee’s and the committee’s rights (as well as the rights of other parties).”

The creditor group said the order includes an unreasonable asset sale timeline, expands Citibank and the pre-bankruptcy lenders’ collateral package and inappropriately grants releases and provides indemnity in favor of Citibank, the lenders and related parties.

In addition, the committee said it has serious concerns that the proposed order would “doom any prospects for a recovery to unsecured creditors.”

PostRock, an oil and natural gas company based in Oklahoma City, filed for bankruptcy on April 1. The Chapter 11 case number is 16-11230.

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