Tekoil files reorganization plan; Gulf Coast assets to be sold

By Caroline Salls

Pittsburgh, Feb. 13 - Tekoil & Gas Corp. filed its plan of reorganization Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the plan, the company will auction all of the assets of its Gulf Coast debtor before the plan confirmation hearing.

A creditor trust will be established to make payments to creditors. The trust will be funded by sale proceeds and proceeds from causes of action.

Creditor treatment will include:

• Holders of administrative claims, DIP loan claims, priority tax claims, other priority claims, secured tax claims and J. Aron secured claims will be paid in full in cash from the creditor trust;

• Holders of CIBC secured claims will receive the proceeds of the sale of the collateral securing the claim;

• Holders of other secured claims will be paid in full either in cash or through the return of the collateral securing the claim;

• Holders of general unsecured claims will receive a share of distributions from the creditor trust;

• Holders of subordinated claims and intercompany claims will not receive any distribution under the plan; and

• Interest holders will retain their interests, but they will not receive any distribution until all administrative, priority, secured and unsecured claims are paid in full.

Based in the Woodlands, Texas, Tekoil is an oil and natural gas exploration, development, acquisition and production company that filed for bankruptcy on June 10, 2008. The Chapter 11 case number is 08-80270.

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