Linc stipulation sets plan and cash use terms, calls for notes payment

By Caroline Salls

Pittsburgh, Nov. 22 – Linc USA GP requested court approval of a stipulation that calls for changes to its final debtor-in-possession financing order, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

In addition to detailing the terms of use of cash collateral, Linc said the stipulation outlines the terms of a global agreement between an informal creditor group and the official committee of unsecured creditors on the terms of a plan of liquidation.

The company said the stipulation also provides that it will deliver $22.32 million of sale proceeds for an interim distribution to first-lien noteholders no later than three business days after the agreement is approved.

Linc’s cash collateral use will be extended under the stipulation to March 1. The access to cash collateral will terminate sooner if specified case milestones are not met.

Under the stipulation:

• On the plan effective date, a trust will receive $950,000 earmarked for distribution to non-deficiency unsecured trade creditors;

• The debtors’ remaining assets will be transferred to a trust, with pre-bankruptcy noteholders receiving all Wyoming sale proceeds;

• The pre-bankruptcy noteholders and unsecured creditors will each receive 50% of the proceeds of the cash securing performance bonds naming Linc Energy Operations Inc. (LEO) as the beneficiary and refunded to LEO;

• The pre-bankruptcy noteholders will receive 60% of all other assets, and unsecured creditors will receive the remaining 40%;

• The liquidation trust will initially be funded with $100,000 from the secured lenders’ share of the proceeds of the LEO bonds;

• The pre-bankruptcy noteholders will then be entitled to the first $100,000 of proceeds from trust assets other than the LEO bonds as repayment of the $100,000 of initial funding;

• All assets related to the company’s Alaska oil and gas business that were not purchased through a previous sale will be transferred to Malamute Energy without further payment to the Linc estates, other than an $80 million reduction in debt resulting from a credit bid; and

• Other than the LEO bonds, the company’s performance bonds naming a debtor other than LEO as principal, and the cash securing those bonds that is subsequently released, will be treated as secured collateral of the pre-bankruptcy noteholders and distributed solely to the noteholders.

A hearing is scheduled for Dec. 5.

Linc Energy is a Brisbane, Australia-based energy producer with a commodity portfolio including oil, gas, shale and coal. Its U.S. subsidiaries filed for bankruptcy on May 19, 2016 under Chapter 11 case number 16-32689.

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