Court Enters Order Finally Approving Sale Option Settlement Proposal

On November 21, 2012, the Court entered an Order finally approving the settlement between the Debtor and Halcon (“Order”), which constitutes the sale to Halcon of all of the Debtor's leases and assets, as is where is, for $10,000,000.  On or before December 12, 2012, the Debtor must file a Sale Motion setting forth the terms of the proposed sale to Halcon and indicating that such sale is subject to higher offers at a public hearing and auction.  The sale hearing has been scheduled for January 25, 2012 at 10:00a.m. in the Erie Bankruptcy Courtroom, U.S. Courthouse, 17 S. Park Row, Erie, PA 16501.  Responses to the Sale Motion shall be filed on or before December 28, 2012.

The Debtor’s advertisement of the sale will inform Potential Bidders that due diligence materials related to the Subject Interests are available for review.  Per the terms of the Order, any Potential Bidder is one who (i) has executed an appropriate confidentiality agreement and (ii) the Debtor or Broker reasonably believes is capable of submitting a Qualified Bidder Deposit of $1,000,000.  In order to be eligible to participate in the auction, each bidder must be determined to be a Qualified Bidder, which is a Potential Bidder that has submitted a Qualified Bidder Deposit and has submitted documentation evidencing sufficient financial resources and legal capacity to consummate the transaction.  

Any successful bidder shall pay Debtor’s counsel in escrow within ten (10) calendar days of the entry of an order confirming the sale.  Any successful bidder will accept the form and substance of all Ratifications of Leases in the Debtor’s possession as currently proposed, subject to further consent to amend in the interim.  A copy of the Order more thoroughly setting forth all of the specific requirements for any bidder and for the sale is available upon request to ozgascommittee@quinnfirm.com.

Court Approves Sale Option; Halcon Trial Cancelled

Updating a previous post, the Court on November 13, 2012, entered an Order granting, in part, the Debtor's Emergency Motion to Approve Settlement ("Motion") with Halcon Energy.  The Court approved the Sale Option by which Halcon would purchase the all of the Debtor's leases and assets, as is where is, for $10,000,000 in order to settle the pending litigation.  As a result, the trial previously scheduled to begin on Monday, November 19 has been cancelled, and a sale hearing has been tentatively scheduled for January 25, 2013.

Debtor Files Motion to Approve Settlement with Halcon

On November 5, 2012, the Debtor filed an Emergency Motion to Approve Settlement (“Motion”) with Halcon in order to resolve the Complaint for Injunctive Relief that the Debtor previously filed against Halcon.  The Debtor and Halcon have agreed to a choice between two (2) potential settlement scenarios, as set forth in the Motion.  Under the first offer, Halcon would pay the Debtor $10,000,000 to purchase, as is where is, all leases and assets identified in the sale agreement previously approved by the Court (the “Sale Option”).  Under the second offer, Halcon would pay the Debtor $3,500,000 in exchange for a release of all claims arising out of the sale agreement, and the Debtor would retain all of its rights in all leases and assets identified in the sale agreement (the “Cash Option”).  

The Debtor has concluded that the Cash Option is the better settlement offer for the Bankruptcy Estate and its creditors, and it is seeking Court approval for the same on an expedited basis by the filing of its Motion.  A hearing has been scheduled on the Motion for November 13, 2012, at 10:00a.m. in the Erie Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, PA 16501.  Any responses to the Motion are due by November 13, 2012 before 9:00a.m.