Marion Energy’s proposed access to DIP loan denied for second time

By Kali Hays

New York, Dec. 19 – Marion Energy Inc. received a denial of its request that the U.S. Bankruptcy Court for the District of Utah reconsider its refusal to allow the company to access $700,000 of a proposed $4.2 million debtor-in-possession loan from KM Custodians Pty Ltd., according to a Thursday order.

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.

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

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