- The intermediary service provider looks for money or credit to protect the lien
- Lenders prevail over disputed $ 150 million claim
- The hearing resumes on Tuesday
(Reuters) – Lenders at Nine Point Energy Holdings Inc must provide liquidity or a letter of credit to protect an intermediary service provider’s interests in certain assets before they can proceed with a proposed purchase of $ 250 million from the bankrupt energy company, a judge ruled on Monday.
U.S. bankruptcy judge Mary Walrath in Wilmington, Delaware, delivered her ruling in a virtual hearing that Caliber Midstream Partners LP has statutory liens on certain assets related to approximately $ 7.1 million in claims. However, she rejected Caliber’s claim that she holds liens supporting Caliber’s largest $ 150 million claims against Nine Point. The dispute has delayed Nine Point’s efforts to sell its assets to its lenders through a bankruptcy sale.
Represented by Latham & Watkins, Nine Point had approximately $ 273 million in debt when it filed for Chapter 11 protection in March. The Denver-based company, which has blamed its financial woes on the combined impact of the COVID-19 pandemic and the Russia-OPEC oil price war, is approaching the July 8 deadline to sell its assets in part of its loan agreement with lenders. Its exploration and production services are concentrated in North Dakota and Montana.
Caliber, represented by Kramer Levin Naftalis & Frankel and Bailey & Glasser, argues that Nine Point cannot close the sale to lenders unless Caliber receives adequate protection of its privileges, which largely flow from collection services, processing, and transportation of oil and gas. he provided nine points. At the conclusion of Monday’s hearing, Caliber’s attorney, Kevin Barrett of Bailey & Glasser, rejected an offer from lenders to take responsibility, with a cap of $ 7.1 million, for the amount correct that the court finally considers that the valid claims are worth – which it did not make within the framework of its decision.
Walrath agreed with Barrett, saying lenders should either put money aside, issue a letter of credit, or grant a replacement lien for Caliber.
“It is not enough to promise to pay a claim in the future,” she said.
Counsel for the parties will return to Walrath’s virtual hearing on Tuesday to determine how to proceed.
Nine Point canceled its intermediary services agreement with Caliber shortly before filing for bankruptcy. Caliber, which has claimed around $ 157 million in claims against Nine Point, recently said a renegotiated contract with Nine Point was still possible.
Nine Point is the reorganized company resulting from the bankruptcy of Triangle Petroleum Corp in 2016.
The case is In re Nine Point Energy Holdings Inc, United States Bankruptcy Court, District of Delaware, No. 21-10570.
For Nine Point: Caroline Reckler of Latham & Watkins; Michael Nestor of Young Conaway Stargatt & Taylor; and Jones Day’s Heather Lennox as Special Advisor
For Caliber: Philip Bentley of Kramer Levin Naftalis & Frankel; and Kevin Barrett of Bailey & Glasser
For Lenders: David Hillman of Proskauer Rose
Nine Point Bankruptcy Judge Asks for More Information on Conflict of Privilege