In a closing to the final chapter of the nearly 24 months Chapter 11 Houston bankruptcy process, the Texas-based Breitburn Energy Partners successfully exited chapter 11 reorganization this week. The company will now be known as Maverick Natural Recourses LLC. The company, who began its Chapter 11 bankruptcy process in 2016 after oil prices plummeted will be controlled by EIG Global Energy Partners.
Chapter 11 Bankruptcy Reorganization
The Chapter 11 bankruptcy reorganization process will mean that the company will exit bankruptcy will just $105 million, which is a fraction what they owed when entering into the bankruptcy process.
Turmoil Surrounding Breitburn Energy Partners Bankruptcy
The company faced significant obstacles in restructuring under chapter 11 bankruptcy. Breitburn and its bankruptcy attorneys filed for several extension on delivering a reorganization plan. Normally companies have just four months after submitting a voluntary petition for Chapter 11 bankruptcy protection, but the company
Once finally completed, Breitburn Energy’s’ bankruptcy exit plan was originally rejected by a US Bankruptcy Judge Stuart Bernstein in March. Even earlier in the year, a bitter valuate battle emerged between Breitburn and its shareholders over the structuring of the company. Under a master limited partnerships, shareholders would have to treat canceled debt as taxable income, leaving them with potentially hefty tax charges.
A New Company Start
The company will also emerge bankruptcy with a solid borrowing capacity of $295 Million under their new bank credit facility. Breitburn is exiting its bankruptcy at roughly the same time as another Houston based oil and natural gas company, Fieldwood Energy.
Chapter 11 Bankruptcy
Many described Breitburn Energy’s financially restructuring using Chapter 11 bankruptcy would never end. Because the oil and gas giant had so many creditor claims to its assets in bankruptcy via shareholders, it became extremely difficult to ascertain the value of assets when combined with the wild swings in oil and gas prices. This was exacerbated by the ability to actually pay out recovery to creditors and equity holders.