Intervention Energy objects to EIG’s motion to dismiss Chapter 11 cases

By Sheri Kasprzak

New York, May 31 – Intervention Energy Holdings, LLC filed an objection to EIG Energy Fund XV-A, LP’s motion to dismiss the company’s Chapter 11 cases, said a filing Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

EIG, the company’s largest secured creditor, is seeking a dismissal of the bankruptcy cases on the grounds that the filings were not authorized because the debtors did not obtain its consent to the filing pursuant the terms of the debtors’ operating agreements.

“EIG admits that its forbearance was ‘predicated upon, and directly induced by’ its ability to prevent the debtors from filing for bankruptcy protection. Thus, EIG, the single-largest secured creditor of the debtors, negotiated a pre-petition agreement eliminating the debtors’ ability to seek bankruptcy court protection absent EIG’s consent. Courts have uniformly rejected similar pre-petition agreements, which indirectly accomplish a waiver of bankruptcy rights, and this court should continue that line of holdings that vigilantly protect the fundamental conditional right to bankruptcy protection,” said the objection.

In May, as oil prices hit a multi-month high, Intervention’s board of managers started to consider its options to avoid what it calls “EIG’s predatory intentions.”

“The board of managers believed, and still believes, that there is significant equity value in the debtors’ enterprise and that the financial outlook of the debtors will turn around shortly after refinancing, allowing the debtors to operate on a cash-flow positive basis,” said the motion.

“The debtors’ parent’s equity holders, other than EIG, have in the past invested significant capital in the debtors. In consideration of the debtors’ remaining creditors – including secured swap counterparty BP Energy Co. and Statoil Oil & Gas LP, which holds an unsecured trade debt claim in the amount of approximately $3.8 million – the board of managers, in the discharge of their fiduciary duties and in their sound business judgment, decided to preserve the value of the debtors’ enterprise [for] the benefit of their creditors and other stakeholders.”

Based in Minot, N.D., Intervention Energy is a non-operating oil and gas exploration and production company. The company filed for bankruptcy on May 20 under Chapter 11 case number 16-11247.

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