Rockall trying to ‘steamroll’ unsecured creditors, committee says

By Sarah Lizee

Olympia, Wash., March 28 – Rockall Energy Holdings, LLC’s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the Northern District of Texas to adjourn the final hearing on a proposed $51 million debtor-in-possession facility to April 7 from March 30, according to an emergency motion filed Friday with the U.S. Bankruptcy Court for the Northern District of Texas.

“These Chapter 11 cases present myriad complex issues and have already embarked on a course in which the debtors and secured parties have sought to completely disenfranchise unsecured creditors,” the committee said in its motion.

“The strategy is designed as a three-pronged approach in which the sale and bidding procedures, the DIP motion, and the solicitation and notice procedures, are employed in tandem to ensure that all value flows to the secured parties, leaving all unsecured creditors with nothing.”

While the company has agreed to an extension of the objection deadline, it did not agree to adjourn the final hearing.

The committee said the refusal to adjourn the final hearing is “ostensibly a part of the debtors’ efforts to steamroll” unsecured creditors and the committee.

As previously reported, the DIP motion has drawn an objection from Region 6 U.S. trustee William T. Neary, who said the DIP facility inappropriately improves the position of Goldman Sachs Bank USA and Shell Trading Risk Management, LLC by granting a superpriority claim of prepetition debt over post-petition debt, including certain unmortgaged Mississippi real estate and Chapter 5 avoidance actions.

“The motion is silent as to how the $34 million roll-up of pre-petition debt benefits the estate,” the U.S. trustee said in his objection.

“The motion is also silent as to the potential value of the debtors’ unencumbered Mississippi assets or Chapter 5 avoidance actions.”

Neary said that given that the case is a pre-negotiated plan without the vote of general unsecured creditors, the debtors and DIP lenders should be required to produce evidence as to what value is provided to the estate by the DIP facility and why general unsecured creditors should be deprived of a recovery from potentially valuable causes of action.

The Dallas-based oil exploration and production company filed Chapter 11 bankruptcy on March 9 under case number 22-90000.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.