Lone Pine Resources litigant objects to delay of New York lawsuit

By Jim Witters

Wilmington, Del., Oct. 15 - Lone Pine Resources, Inc.'s foreign representative's request for U.S. recognition of its Canadian case drew an objection from a litigant in a securities class action in a New York court, according to an Oct. 15 filing with the U.S. Bankruptcy Court for the District of Delaware.

Adar Investment Fund, Ltd. said the halting of the case in the U.S. District Court for the Southern District of New York harms Adar.

The New York case, in which Lone Pine is one of 12 defendants, concerns Lone Pine's "false and misleading IPO prospectus," according to the filing.

The initial order in the Canadian Companies' Creditors Arrangement Act case as well as a provisional order and the proposed final order in the U.S. bankruptcy court "improperly enjoin" the New York proceedings, Adar claimed.

"Continuing the securities class action will not affect the assets of the debtor. Indemnification by Lone Pine of any party in connection with securities act claims is barred as against public policy. Under such circumstances, the insurance proceeds at issue in the securities class action are not assets of the debtor," the filing stated.

Adar argued that the securities litigation will not encumber the debtor's reorganization.

"Adar and investors who purchased Lone Pine stock, however, will suffer substantial harm if the securities class action remains stayed. Plaintiffs will continue to be denied the opportunity to recover losses caused by defendants' issuance of a misleading IPO prospectus - a wrong that occurred on May 26, 2011," according to the filing.

Adar is asking the U.S. court to modify its final order to "limit the scope of the injunction permitting the securities class action to continue and stayed only as to the debtor. Furthermore, Adar requests a modification to the final order stating any insurance proceeds paid in connection with a settlement or judgment in the securities class action are not property of the debtor."

A hearing is scheduled for 11 a.m. ET on Oct. 22.

Lone Pine is a Calgary, Alta., company engaged in the exploration and development of natural gas and light oil in Canada. The Chapter 15 case number is 13-12487.

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