Rooster Energy settlement allows for greater recovery for creditors

By Caroline Salls

Pittsburgh, Feb. 26 – Rooster Energy, LLC, its affiliated debtors and Chapter 7 trustee Elizabeth G. Andrus requested court approval of a settlement expected to “substantially benefit creditors of the Rooster Chapter 7 debtors,” according to a motion filed Monday with the U.S. Bankruptcy Court for the Western District of Louisiana.

“The settlement parties have diverging interests in many respects, and these cases have involved a significant amount of litigation as a result,” the motion said.

“The settlement provides certainty for the debtors and their respective estates and creditors, as it puts to rest the threat of costly and time-consuming litigation and allows a clean break for each of the settlement parties.”

Under the settlement, noteholders would immediately release $100,000 of their cash collateral for the benefit of the Rooster Chapter 7 debtors’ estates, and lender Corn Meal would transfer $100,000 to the Chapter 7 trustee for the benefit of the estates from funds held in escrow under the debtor-in-possession credit facility provided by Corn Meal.

In addition, the motion said the settlement would also allow the Rooster Chapter 7 debtors’ estates to receive half of all cash, after reimbursement of costs and payment of a commission, recovered on account of any causes of action pursued on behalf of the estates for the benefit of creditors.

“Without the settlement, such cash recovery would likely go almost entirely to the administrative agent and the noteholders because of their super-priority adequate protection claims and substantial deficiency claim,” the motion said.

Rooster said the settlement also includes subordination of the adequate protection claims to be equal with the allowed claims of most other general unsecured creditors.

In exchange for these benefits, the debtors and trustee have each agreed to grant a release of the administrative agent, the noteholders, Cochon Properties, LLC, Morrison Well Services, LLC and the Morrison Group and the Rooster Chapter 11 debtors, the motion said.

Rooster is a Houston-based oil and gas production company that filed for bankruptcy on June 2, 2017. The cases of three of the debtors were converted to Chapter 7 on Dec. 4. The case number is 17-50705.

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