Bankruptcy News

Cobalt International Energy Chapter 11 Petition Filed

Cobalt International Energy and five affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 17-36709. The Company, which explores and produces oil and gas, is represented by Zack A. Clement of Zack A. Clement PLLC. A corporate release notes that the Company expects to conduct business in the ordinary course, and its cash on hand is expected to provide Cobalt International Energy with adequate liquidity to fund its operations during the restructuring process. The Company explains, "Cobalt has been engaged in constructive discussions with its first lien noteholders, second lien noteholders, unsecured noteholders and their respective advisors regarding the need for, sponsorship of, and terms of a restructuring and proposed sale of Cobalt's assets. Cobalt plans to utilize the Chapter 11 Cases to continue and complete these discussions with key stakeholders and evaluate other value-maximizing opportunities to facilitate an expedited restructuring that will deliver maximum value to its stakeholders."

Energy Future Holdings Objection Filed

The U.S. Trustee assigned to the Energy Future Holdings case and Delaware Trust Company filed with the U.S. Bankruptcy Court a separate final objection and reservation of rights, respectively, to Energy Future Holdings' First Amended Joint Plan of Reorganization. The Trustee asserts, "The E-Side Plan may be otherwise confirmed but only to the extent that approval of the payment of the reasonable fees and expenses of the EFH Notes Trustee, and any other such other party, are authorized by the Bankruptcy Code under section 503(b) and such allowance and payment is consistent with applicable bankruptcy law and prior rulings by this Court in these Chapter 11 cases….Although the E-Side Plan provides for the payment of EFH Notes Trustee's reasonable professional fees and expenses in accordance with prior rulings of this Court and specifically pursuant to section 503(b)(3)(D), 503(b)(4) and 503 (b)(5) of the Bankruptcy Code, the highlighted language of the above-cited E-Side Plan provision potentially opens a door to the possibility that in the event that this Court does not find that the EFH Notes Trustee (or other party seeking such fees) has made a substantial contribution in these cases subsequent to February 17, 2017, such fees and expenses may otherwise be allowed as an administrative expense. The quandary engendered by this particular caveat in Article IV. Section N.1. of the E-Side Plan is such fees and expenses might be allowed and paid without an underlying valid legal basis or justification for such payment under the Bankruptcy Code. This caveat also conflicts with prior rulings by this Court in these cases."

Aeropostale Plan Filed

Aeropostale filed with the U.S Bankruptcy Court a Third Amended Joint Chapter 11 Plan of Liquidation and related Disclosure Statement. According to the Disclosure Statement, "The Plan provides for distribution of proceeds from the Sale Transaction, pursuant to which the Debtors sold substantially all of their assets to Aero OpCo LLC….The proceeds from the Sale Transaction have been and will continue to be used to fund the ongoing wind-down costs of the Chapter 11 Cases and will be used to fund Distributions under the Plan. The wind-down of the Debtors' estates have cost approximately $7 million to date. The Debtors estimate that the ongoing wind-down costs of the Chapter 11 Cases will amount to approximately $2 million….Class 3 is Impaired by the Plan. Each holder of a Term Loan Secured Claim is entitled to vote to accept or reject the Plan… The Term Loan Secured Claim shall be an Allowed Claim in the amount of $150 million, plus accrued and unpaid interest in the amount of $10,359,927, plus all fees and costs recoverable under the Term Loan Agreement, minus any amounts the Debtors pay to the Term Loan Lenders before Confirmation of the Plan. Pursuant to the Cash Collateral Orders, the Term Loan Lenders have received an interim distribution in the amount of $126,500,000….Class 5 is Impaired by the Plan. In light of the fact that the Term Loan Secured Claim and the Term Loan Diminution Claim are not anticipated to be satisfied in full, Holders of General Unsecured Claims shall not receive or retain any property under the Plan on account of such Claims." The Court scheduled a January 25, 2018 hearing to consider the Disclosure Statement.

America Greener Technologies M.O. R's Filed

America Greener Technologies filed with the U.S. Bankruptcy Court monthly operating reports for (1) July 2017, (2) August 2017, (3) September 2017, (4) October 2017 and (5) November 2017. For the months, the Company reported the following totals: $19,521 operating loss before depreciation, amortization, reorganization expenses and income taxes and equity earnings on zero total income for July 2017; $14,749 operating loss before depreciation, amortization, reorganization expenses and income taxes and equity earnings on zero total income for August 2017; $16,075 operating loss before depreciation, amortization, reorganization expenses and income taxes and equity earnings on zero total income for September 2017; $13,062 operating loss before depreciation, amortization, reorganization expenses and income taxes and equity earnings on zero total income for October 2017 and $13,994 operating loss before depreciation, amortization, reorganization expenses and income taxes and equity earnings on zero total income for November 2017.

Cobalt International Energy Procedures Approval Sought

Cobalt International Energy filed with the U.S. Bankruptcy Court a motion for entry of an order approving bidding procedures for the sale of the Debtors' assets and scheduling a related auction. The motion explains, "The Debtors have commenced these chapter 11 cases to develop and execute a consensual sale and restructuring transactions with the support of all key constituencies. With that goal in mind, the Debtor seek to expeditiously establish Court-approved bidding procedures for a sale and a schedule for their related chapter 11 plan process….The following dates are scheduled: bid deadline is on February 19, 2018, the Auction shall take place on February 27, 2018." The motion further explains, "The Debtors believe that the bidding procedures and chapter 11 plan schedule proposed here is reasonable and appropriate in the circumstances. Nonetheless, the Debtors do not ask the Court to approve the bidding procedures or schedule immediately. The Debtors will discuss their proposed schedule with the other key parties to these cases in an effort to reach consensus before the 'second day' hearing in January 2018. If the Debtors are not able to reach agreement on a consensual scheduling order, the Debtors will present their proposed schedule to the Court for consideration and ruling to move these cases forward to an efficient resolution….The proposed Bidding Procedures contemplate that a buyer for the Assets will be identified at a later date, either at an auction or, under appropriate circumstances, through the Debtors’ identification of a Stalking Horse Bidder."

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