Rockdale Marcellus picks stalking horse, but court says notice flawed

By Sarah Lizee

Olympia, Wash., Dec. 8 – Rockdale Marcellus Holdings, LLC said it has chosen TXCR Acquisition Co., LLC to serve as stalking horse bidder for the sale of substantially all of its assets, according to a notice filed Tuesday with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

At the same time, the company filed a motion seeking a one-day extension of the deadline to file a stalking horse agreement.

Later Tuesday, the court issued an order denying the extension, and saying that the stalking horse notice was deficient.

The court noted that both the notice and the extension motion were filed “minutes before the debtors’ self-imposed deadline” to disclose a stalking horse bidder was set to expire.

The court said the title of the notice is misleading because it references the filing of a stalking horse agreement, but by the debtors’ own admission, no agreement is attached. Instead, the company filed the extension motion so that it would have another day to produce the stalking horse agreement.

“The debtors conceded that ‘the parties remain in negotiations on the form of stalking horse agreement’ and candidly reveal that additional time is needed ‘to continue negotiating the precise terms’ of any such agreement,” the court said.

“The lack of a definitive agreement reveals the notice’s second, but fatal, flaw: without a stalking horse agreement, there is no stalking horse bidder.”

The court added that even if it were to consider a further extension, the debtors failed to show that it would not cause prejudice.

“It is difficult to assess the propriety of bid protections without knowing the terms of the stalking horse bid,” the court said.

“And absent details of any kind, parties cannot credibly ascertain the benefit brought to the estate by the proposed bidder.”

The court also added that any extension at this point would only reduce the period a party would have to review an “undoubtedly complex and voluminous” document.

“Ultimately, the debtors proposed an aggressive timetable for their sale. Now that impediments have appeared, the debtors wish to maintain their schedule at the expense of other parties,” the court said.

As previously reported, under the bid procedures, the bid deadline is 5 p.m. ET on Dec. 13, an auction will be held on Dec. 16 and a sale hearing will be held on Dec. 22.

Canonsburg, Pa.-based Rockdale is an independent exploration and production company with a gas-focused asset base. The company filed bankruptcy on Sept. 21 under Chapter 11 case number 21-22079.

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