Cox Oil Offshore’s Chapter 11 bankruptcy case converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Feb. 29 – Cox Oil Offshore, LLC’s emergency motion seeking conversion of its Chapter 11 case to Chapter 7 was approved by the U.S. Bankruptcy Court for the Southern District of Texas on Wednesday, according to an order.

The company had said emergency relief was needed to minimize the depletion of cash and the accrual of administrative expenses, so that a Chapter 7 trustee is as well-positioned as possible to liquidate the debtors’ estates and remaining assets for the benefit of creditors and other parties in interest.

The debtors estimate that, as of Feb. 16, they have about $50 million in accrued administrative trade and royalty expenses, which continue to increase, but only have about $7 million of remaining cash collateral available to be used on a consensual basis with the debtor-in-possession facility agent.

Of that $7 million, the debtors estimate that about $3.4 million will be used to pay accrued payroll expenses through Feb. 23.

“The debtors simply do not have any further ability to remain in Chapter 11 and are at risk of being unable to pay future payroll if these Chapter 11 cases are not converted by Feb. 23,” the company said in the motion.

Cox Oil said it is currently working with its DIP lenders and the official committee of unsecured creditors on the terms of a potential structured, consensual conversion to Chapter 7 – including additional funding of cash collateral to the Chapter 7 trustee.

The Dallas-based drilling company filed bankruptcy on May 14, 2023 under Chapter 11 case number 23-90324.

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