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Furie case closing?
3rd plan of reorganization calls for June 30 closing of
sale to HEX C. I.
Steve Sutherlin Petroleum News
The long and winding Chapter 11 bankruptcy case of Furie Operating Alaska LLC may soon come to a close, if an order filed in a motion for final decree by Furie June 15 in the U.S. Bankruptcy Court for the District of Delaware is granted in a July 7 hearing.
The order would break up a trio of bankruptcy debtors consisting of Furie and related companies, Cornucopia Oil & Gas Company LLC and Corsair Oil & Gas LLC.
The order would close the Chapter 11 cases of Furie and Corsair, leaving Cornucopia to wrap up the business of the companies as the remaining debtor, to avoid imposing “significant costs on the debtors’ estates.”
Through the motion, Furie is requesting entry of an order closing the lead case, with all remaining matters to be administered in the Chapter 11 case of the remaining debtor. The caption in the remaining case would be modified to in re: Cornucopia Oil & Gas Company LLC, debtor, rather than Furie Operating Alaska LLC et al, debtors.
The debtors expect the effective date of the plan to occur on June 30, at which point the plan will have been substantially consummated, the June 15 motion said.
Third amended joint plan of reorganization confirmed The motion to close the Furie and Corsair cases is made practicable by a signed order that arose from a June 11 hearing in the Wilmington court.
U.S. Bankruptcy Judge Laurie Selber Silverstein signed a confirmation order June 12, of Furie’s third amended joint plan of reorganization, which sets forth the details of the sale of the debtors’ assets in the Cook Inlet Kitchen Lights unit to Anchorage based Hex LLC, a company formed in November which is 100% owned by member manager John L. Hendrix.
Under the plan, Furie’s secured term lenders will foreclose on Furie and related debtor companies, and subsequently sell the equity to Hex’s designee, HEX Cook Inlet LLC for $5 million and other consideration.
The confirmation order authorizes the debtors to enter into and implement the “RWIO consent letter,” which reflects a settlement with working interest owners - Giza Holdings LLC; Taylor Minerals LLC; Allen Lawrence Berry; the 2007 Allen Lawrence Berry Trust; and Danny Davis. The letter was filed as part of the amended plan April 19, as Exhibit C to the term sheet. The settlement will reduce the RWIO group’s working interest from 20% to 10%, once the equity sale is complete, while preserving the group’s overriding royalties.
The order also protects other royalty owners, stating that nothing in the plan or its documents “shall impact any rights, property, interests, claims or defenses that may exist under applicable nonbankruptcy law solely with respect to any valid overriding royalty interests in the oil and gas leases operated by the debtors.”
The order addresses objections to the second amended plan of reorganization, filed June 6 by the United States on behalf of the U.S. Bureau of Customs and Border Protection, over $7.2 million owed on a prepetition Jones Act fine settlement between Furie and Customs.
“Notwithstanding any provision of the plan, this confirmation order, or any implementing or supplementing plan documents, the United States’ setoff rights under federal law as recognized in Bankruptcy Code section 553, and recoupment rights, shall be preserved and are unaffected,” the order said.
Other consideration: Tax credits, AIDEA financing keys to transaction In addition to $5 million in cash from Hex - the acquirer, a $15 million debtor in possession, or DIP, refinancing loan will be issued, secured by a second priority lien behind ING Capital LLC on the State of Alaska tax credit priority collateral, also secured by a second priority lien on all of the assets or property of the reorganized debtors behind a first lien to Alaska Industrial Development and Export Authority debt, not to exceed $7.5 million in principal amount plus an additional $5 million in advances.
The first source of repayment for the DIP loan is State of Alaska tax credits already earned but unpaid to date.
Prepetition term loan lenders will receive shares of a $21 million new term loan issued by the reorganized Cornucopia Oil and Gas, secured by a third priority lien on the tax credit priority collateral.
Proceeds from the state tax credits are to be applied first to repay a new $60 million tax credit loan to ING until repaid in full; second, to repay the $15 million DIP replacement loan until repaid in full; third, to repay the $21 million new term loans, split 75% to the holders of the new term loans and 25% to the acquirer for every dollar; and fourth, the remainder, if any, to the acquirer.
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