Marion Energy looks for court reconsideration of denied DIP access

By Kali Hays

New York, Dec. 16 – Marion Energy Inc. asked the U.S. Bankruptcy Court for the District of Utah to reconsider its denial of the company’s request to access $700,000 of a proposed $4.2 million debtor-in-possession loan from KM Custodians Pty Ltd., according to an emergency motion filed Monday.

As previously reported, the court also ordered the company to pay back the outstanding amount under its pre-bankruptcy credit agreement with TCS II Funding Solutions, LLC and Castlelake LP by June 1, or its case will be dismissed with prejudice.

Marion said that without access to DIP financing, it will be “impossible” to pay back the loan amount and that it will be unable to “survive for much more than a few weeks.”

Moreover, Marion claimed that TCS’ motivation is “to let the debtor fail, then conduct its own commercially reasonable sale process and capture all the economic ‘upside’ (which everyone agrees is there) for itself,” according to the motion.

“Without the requested relief, the debtor’s principle asset, along with its substantial economic ‘upside,’ will belong outright to the secured lender, TCS, in a matter of weeks.”

Marion asked for a reconsideration of the DIP financing under the same terms as it previously presented.

Interest will be 14%.

The facility will mature on the earliest of 270 days after the bankruptcy filing date, the effective date of a plan of reorganization, 35 days after the interim order if a final order has not been entered and acceleration of the loan upon occurrence of an event of default.

Marion is an Allen, Texas-based natural gas exploration company that filed for bankruptcy Oct. 31. The Chapter 11 case number is 14-31632.

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