Ruby Pipeline files Chapter 11 plan and disclosure statement

By Sarah Lizee

Olympia, Wash., Nov. 2 – Ruby Pipeline LLC filed a Chapter 11 plan and related disclosure statement on Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Ruby said it is well-positioned to maximize value for the estate and its creditors by pushing forward with the sale and marketing process.

The debtor has procedures in place to designate a stalking horse, entertain qualified bids, and conduct an auction for the sale of reorganized equity.

If a sale closes, the debtor plans to make distributions to some of its creditors with cash on hand, sale proceeds, and proceeds from any settlement or litigation of causes of action belonging to the estate.

However, the plan includes a toggle mechanic that provides, among other things, for noteholders to equitize their debt and receive 100% of the reorganized equity if certain conditions are not satisfied.

The sale transaction conditions include the following:

• The debtor obtaining binding commitments by the time of the confirmation hearing with respect to investments in the reorganized debtor and the settlement of claims that will provide enough net cash proceeds to satisfy the allowed notes claim in full in cash;

• The debtor having enough net cash proceeds to satisfy all holders of allowed claims, excluding holders of subordinated notes claims, in full, unless the holders of notes claims vote to accept the plan;

• All other payment obligations under the plan are satisfied or reserved for; and

• The bankruptcy court confirms the plan and approves the sale transaction.

Additionally, in this reorganization transaction, the remainder of the debtor’s assets would be transferred to a liquidation trust. All holders of allowed claims would be entitled to interests in such liquidation trust and receive a distribution in accordance with the plan in an amount sufficient to pay their respective claims in full.

Under the plan, priority non-tax claims, and general unsecured claims are unimpaired.

The Klamath claim is impaired and will be treated in line with an agreement with the debtor to be reached prior to the confirmation date.

For notes claims, if a sale occurs, holders will receive their pro rata share of net cash proceeds equal to their claims, payment of any post-petition interest required by the court, and payment of any allowed indenture trustee fees and expenses. Under a reorganization transaction, holders will get 100% of the reorganized equity interests, liquidation trust beneficial interests entitling holders to receive net cash proceeds until the claims are paid in full, and payment of any allowed indenture trustee fees and expenses.

If a sale occurs, holders of subordinated notes claims will either have their claims reinstated, or receive their pro rata share of remaining net cash proceeds or liquidation trust beneficial interests entitling holders to receive net cash proceeds until the claims are paid in full, but only after other amounts are paid in full, including notes claims.

If a reorganization transaction occurs, holders of subordinated notes will receive their pro rata share of liquidation trust beneficial interests.

Holders of existing equity interests will receive their pro rata share of the remaining net cash proceeds and liquidation trust beneficial interests after other amounts are paid under the plan.

Ruby Pipeline, based in Houston, is a subsidiary of El Paso Corp. and Global Infrastructure Partners LLC. It is a 680-mile natural gas pipeline that stretches from Wyoming to Oregon. The company filed Chapter 11 bankruptcy on March 31, 2022 under case number 22-10278.

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