Cobalt International Energy noteholders oppose disclosure statement

By Caroline Salls

Pittsburgh, March 6 – An informal group of Cobalt International Energy, Inc. first-lien noteholders objected to the disclosure statement for the company’s proposed Chapter 11 plan, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas.

“The plan, as proposed, is patently unconfirmable, and solicitation of the plan in its current form is a waste of estate resources,” the noteholder group said in the objection.

The noteholders said the disclosure statement “fails to inform voting creditors that the plan is not reasonably acceptable to the ad hoc first-lien group, thereby creating an immediate and continuing default under the final cash collateral order.”

According to the objection, the plan is not acceptable to the noteholders because it attempts to treat the first-lien notes claims in a manner inconsistent with the indenture, and it is intended to “materially reduce” recoveries the first-lien noteholders are legally and contractually entitled to receive.

In addition, the group said the disclosure statement contains errors, including that the first-lien indenture precludes Cobalt from seeking reinstatement of the notes as proposed in the plan, and that reinstatement will not enable the company to “materially reduce” the amount of notes claims by calculating the applicable premium as of the effective date as opposed to the bankruptcy filing date “because the first-lien noteholders would be entitled to recover any such reduction as contractual damages under the first-lien indenture.”

Cobalt is a Houston-based exploration and production company active in the deepwater section of the Gulf of Mexico and offshore of west Africa. The company filed bankruptcy on Dec. 14, 2017 under Chapter 11 case number 17-36709.

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