Rockall Energy and creditors agree to settlement term sheet

Chicago, May 2 – Rockall Energy Holdings, LLC, the consenting creditors and the official committee of unsecured creditors entered into a global settlement term sheet on Friday, according to a copy filed with the U.S. Bankruptcy Court for the Northern District of Texas.

General unsecured claims

The term sheet outlines the settlement for general unsecured claims.

A pro rata portion will be paid to holders from $2 million in cash plus 3% of the net sale proceeds in excess of $130 million, whether through a sale or an equitization restructuring.

As to the $5.5 million in cash currently allocated in the approved budget to pre-petition accounts payable payments, $1.75 million will be added to the general unsecured claims pot and $3.75 million will be available to satisfy the accrued prepetition claims of individual trade vendors by the date of the closing of the sale or the effective date of an equitization restructuring.

Any amount left over from the $3.75 million will be added to the general unsecured claims amount, so long at that total amount does not exceed $5.5 million.

Allowed administrative expense claims, other priority claims, priority tax claims and other secured claims are not included in the general unsecured claims pool.

Support

Under the term sheet agreement, the creditors’ committee will support the DIP facility, the key employee incentive plan, the key employee retention plan, retention applications, the bankruptcy plan and approval of the disclosure statement and solicitation procedures.

The group has also agreed to withdraw its objections to those things and the retention of Vinson & Elkins LLP as counsel. Additionally, the objections will be withdrawn for the bidding procedures order.

The committee will also not object to the company’s DIP facility or roll-up.

Calendar and logistics

Rockall has agreed to file a disclosure statement supplement by May 2 for a hearing on May 3.

The voting record date for holders of general unsecured claims will be May 3.

The voting deadline for general unsecured claims to accept or reject the plan will be 6 p.m. ET on May 11.

The hearing to consider the disclosure statement and confirmation of the amended plan will be on May 13.

The committee’s professional fees budget is being increased to $2 million with any unused amounts added to the general unsecured claims pot.

In the final order, the investigation budget for the committee will be increased to $150,000.

Reporting to the DIP lenders and prepetition secured parties will also be concurrently given to the committee.

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

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