Permico Midstream plan accepted by all voting creditor classes

By Sarah Lizee

Olympia, Wash., Aug. 19 – Permico Midstream Partners Holdings, LLC and Chapter 11 trustee William R. Greendyke’s Chapter 11 plan was accepted by all voting creditor classes, according to a ballot summary filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The combined hearing on final approval of the statement and confirmation of the plan is scheduled for Aug. 20, as previously reported.

The plan has two scenarios, including a project transaction with the Permico founders, or a sale of all estate assets.

The first scenario includes the following:

• 100% of the equity in Permico Midstream Partners and Permico Midstream Partners Holdings, LLC will be acquired by Permico Founders, LLC for at least $25 million initially, plus the assumption of all obligations of the debtors, other than those settled or compromised under the plan. The initial contribution will constitute equity rather than debt on the reorganized debtor’s balance sheet;

• Proceeds of the initial contribution will be disbursed, with HGC receiving about $14.5 million, and Corpac receiving about $2.5 million, and $3.5 million being retained for working capital. Another $500,000 will be distributed to a critical vendor class of unsecured creditors;

• The debtors will release any claims and causes of action against HGC in exchange for payment in the amount of $2.5 million;

• The mutual settlement and release of claims between HGC and Corpac in exchange for payment by Corpac to HGC of $3 million and HGC’s assignment of $1.75 million of the $14 million HGC claim balance to Corpac;

• The mutual settlement and release of claims between HGC and Edgen in exchange for payment by Edgen to HGC of $3 million and HGC’s assignment of $1.75 million of the HGC claim balance to Edgen;

• The HGC claim balance will be an assumed obligation of the reorganized debtor and paid by the reorganized debtor as follows: $10.5 million to HGC, $1.75 million to Corpac and $1.75 million to Edgen;

• A pipe sale motion will request immediate authority for Corpac to sell up to $8 million of the Corpac pipe and Edgen to sell up to $8 million of the Edgen pipe and keep all proceeds. For each of Corpac and Edgen, all proceeds above the initial $8 million will be distributed 80% to escrow and 20% to the seller, respectively, until the escrow amount equals $35 million;

• The liquidating trust assets will be transferred to a trust for the benefit of holders of administrative expense claims and general unsecured claims.

If a milestone default occurs under the first scenario, the following will take place under the second scenario:

• Substantially all of the debtor’s assets will be sold for $3.5 million to Integra Midstream Partners LLC, subject to higher bids;

• The mutual settlement and release of all claims of the debtor’s estates and Edgen for $1.25 million, which will be distributed to the administrative expense and escrow;

• Only to the extent that the sale to a buyer affiliated with Corpac does not close, the mutual settlement and release of all claims of the debtor’s estates and Corpac for $1.25 million, which will be distributed to the administrative expense and escrow;

• The release of claims and causes of action against HGC in exchange for $1.25 million, which will be distributed to the administrative expense escrow. Further, HGC will subordinate any lien on proceeds of the sale to allowed administrative claims of up to $3.5 million and only to the extent Corpac, Edgen and HGC settlement payments provided to the trustee are insufficient to satisfy all allowed administrative claims;

• Corpac and Edgen will be responsible for selling their respective pipes. For each of Corpac and Edgen, other than the initial $8 million from any sale, the proceeds will be distributed 80% to escrows and 20% to the respective seller, until the escrow amount equals $35 million for each of Corpac and Edgen;

• Edgen will be allowed a class B general unsecure claim of $1.25 million, and Corpac will be allowed a class B general unsecured claim of $1.25 million, if applicable;

• Holders of general unsecured claims will receive pro rata distributions until their claims are paid in full.

Permico Midstream is a Houston-based crude petroleum and natural gas company. The company filed bankruptcy on May 4, 2020 under Chapter 11 case number 20-32437.

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