Cano Petroleum announces reorganization plan effective date is Aug. 2

By Jim Witters

Wilmington, Del., Aug. 3 - Cano Petroleum, Inc.'s second amended plan of reorganization's effective date occurred on Aug. 2, according to documents filed with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, Cano's plan was confirmed by the court on July 16.

Cano sold its stock to NBI Services, Inc. for $47.5 million. The sale proceeds will be distributed to creditors.

Creditor treatment

Treatment of creditors under Cano's plan include:

• Holders of administrative claims, priority tax claims, royalty claims and priority non-tax claims are paid in full in cash;

• Holders of senior secured claims receive all of the sale proceeds and available cash, except those transferred to a liquidating trust, as well as net proceeds from the sale of other assets, funds remaining in a claims reserve, the proceeds of the sale of closing accounts receivable, any funds remaining in a liquidating trust expense reserve, all forfeited amounts in an undeliverable distribution reserve and all remaining accounts from environmental escrow funds;

• Holders of UnionBanCal Equities, Inc. (UBE) junior secured claims receive any excess amounts if the senior secured claim distribution amounts are more than the allowed senior secured claims and the allowed senior secured claims are paid in full.

If not, holders of UBE junior secured claims will be treated as general unsecured claims;

• Holders of miscellaneous secured claims are paid in cash or receive treatment determined by the bankruptcy court;

• Holders of general unsecured claims receive from the liquidating trust a share of the sum of a gifted amount, plus total cash avoidance action proceeds, less the amount of an avoidance action proceeds reserve or gift reserve required to satisfy plan carve-out claims; and

• Holders of intercompany claims, preferred stock and interests receive no distribution.

Cano, a Fort Worth-based oil and natural gas company, filed for bankruptcy on March 8 under Chapter 11 case number 12-31549.

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