Yuma Energy Chapter 11 proceedings converted to Chapter 7 liquidation

By Sarah Lizee

Olympia, Wash., Oct. 20 – Yuma Energy, Inc. and its subsidiaries, Yuma Exploration and Production Co., Inc., Davis Petroleum Corp. and Yuma Cos., Inc., announced that their Chapter 11 cases were converted to a Chapter 7 liquidation on Monday.

The debtors said they had intended to use the Chapter 11 process to implement the orderly liquidation of their assets in an effort to maximize values and recoveries for all stakeholders and subsequently obtained court approval to conduct an auction for all of their assets, which primarily consist of operating and non-operating interests in several properties located in Louisiana, Texas, Wyoming and Oklahoma.

“Unfortunately, as a result of the severe downturn in commodity prices, multiple operating issues affecting production and operating costs, the inability of debtors to conduct remedial well operations to maintain cash flows, general industry conditions and other factors, bids received for the properties were minimal and the auction was canceled,” the group said in a Tuesday press release.

Additionally, the secured creditor, YE Investment, LLC, an affiliate of Red Mountain Capital Partners LLC and the unsecured creditors committee were unable to resolve disputes.

Subsequently, with the concurrence of YE Investment and the unsecured creditors committee, the company engaged in discussions with a potential acquirer to reorganize through a business sale, but the potential acquirer terminated these discussions on Oct. 13.

Concurrent with the appointment of a Chapter 7 trustee, Anthony C. Schnur, Yuma's chief restructuring officer and the company's directors will no longer control the debtors, including any operation of the debtors, the liquidation of assets, and the resolution of liabilities.

Yuma Energy is an oil and gas company based in Houston. The company filed Chapter 11 bankruptcy on April 15, 2020 under case number 20-41455.

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