Court Enters Order on 3rd Amended Disclosure Statement; Committee Files Motion for Authority to Pursue Turnover Actions

On or about December 13, 2013, the Court entered an Order scheduling a hearing on the Debtor’s 3^rd Amended Disclosure Statement (“Disclosure Statement”) for Monday, January 27, 2014 at 2:30pm in the Erie Bankruptcy Courtroom.  The Order also directs the Debtor to file on or before January 6, 2014, a Statement that sets forth the identity of each party that will receive a release under the Debtor’s Plan, and the consideration for the same.  Objections to the Disclosure Statement are due on or before January 21, 2014.

Meanwhile the Official Committee of Unsecured Creditors filed a Motion for Authority to Prosecute Turnover Actions (“Motion”) against Oz Gas Aviation, LLC, and Richard M. Osborne.  The Committee’s request for authority relates to the Debtor’s refusal to pursue claims against each party based on certain insider advances that have not been repaid to the Debtor or that have otherwise been re-characterized as uncollectible.  The Court also entered an Order scheduling a hearing on the Motion for January 27, with Responses to the Motion due by January 21.

Debtor Files 3rd Amended Plan; Court Schedules Status Conference

On December 2, 2013, the Debtor filed its 3^rd Amended Chapter 11 Plan of Reorganization (“Plan”) and Disclosure Statement setting forth its final proposed treatment of creditors in the Bankruptcy Case and financial information in support thereof.  The Plan remains generally contingent upon the private sale of certain of the Debtor’s assets to an unidentified buyer, together with assets of the Debtor’s affiliated entities, Great Plains Exploration, LLC (“GPE”) and John D. Oil & Gas Company (“JDO”), by March of 2013.  The Debtor proposes to pay RBS $10.8m from the sale proceeds in full settlement of their claim.  The Plan then proposes to pay the unsecured creditors of Oz Gas, LTD 100% of the value of their claim within thirty (30) days of the closing of the sale.  However, the Plan submitted for GPE proposes to pay unsecured creditors only 50%, while the Plan submitted for JDO proposes to pay creditors 90%.  The Plan also provides for the appointment of a Plan Administrator who shall expose the assets of the Debtors’ to a public sale if the settlement payment to RBS is not timely made.

In response to the filing of the Debtor’s Plan, the Court entered an Order on December 5, 2013, scheduling a status conference in the Erie Bankruptcy Courtroom for December 12, 2013, at 10:00am.  The Court’s primary area of concern as described in its Order is the continued inclusion of proposed third-party releases within its Plan, mainly for the benefit of the Debtor’s principal, Richard M. Osborne.  Counsel for the Debtor has been directed to provide an explanation and justification for all such releases at the upcoming status conference.  Copies of the Plan and Disclosure Statement are available upon request to ozgascommittee@quinnfirm.com.

Court Enters Order Requiring 3rd Amended Chapter 11 Plan

Updating a previous post, the Court on November 14, 2013, entered an Order denying the approval of the Debtor’s Second Amended Chapter 11 Plan and cancelling the hearing scheduled for November 22.  The Court’s Order came in response to the Debtor filing a Supplement to Second Amended Disclosure Statement (“Supplement”) on November 13, 2013.  Because the Supplement added information and contemplated significant plan amendments, the Court has directed the Debtor to file a Third Amended Chapter 11 Plan on or before December 2, 2013.  If the Debtor files the new plan before November 21, a hearing will be held on December 12, 2013.  Otherwise a hearing will be scheduled after January 1, 2014.

The Debtor’s prior plan mainly involved a private sale of certain of the Debtor’s oil and gas assets to an undisclosed private buyer, which was to close as early as December 31, 2013, with a negotiated settlement payment on RBS’s claim.  If the private sale failed to close, the Debtor’s prior plan then called for a public sale after the appointment of a plan administrator.  It is anticipated that the Debtor’s new plan will extend the private sale closing date into February 2014. 

Debtor Files 2nd Amended Chapter 11 Plan of Reorganization and Disclosure Statement

On or about September 23, 2013, the Debtor filed its 2^nd Amended Chapter 11 Plan of Reorganization (“Plan”) and Disclosure Statement setting forth its final proposed treatment of creditors in the Bankruptcy Case and financial information in support thereof.  The Plan is generally contingent upon the private sale of certain of the Debtor’s assets, together with assets of the Debtor’s affiliated entities, Great Plains Exploration, LLC (“GPE”) and John D. Oil & Gas Company (“JDO”), by the end of 2013.  The Debtor proposes to pay RBS $10.8m from the sale proceeds in full settlement of their claim.  The Plan then proposes to pay the unsecured creditors of Oz Gas, LTD 100% of the value of their claim within thirty (30) days of the closing of the sale.  However, the Plan submitted for GPE proposes to pay unsecured creditors only 50%, while the Plan submitted for JDO proposes to pay creditors 90%. 

Objections to the Disclosure Statement(s) are due by November 15, 2013, and a hearing has been scheduled in the Erie Bankruptcy Courtroom on November 22, 2013, @ 9:30am.  Copies of the Plan and Disclosure Statement are available upon request to ozgascommittee@quinnfirm.com.

Court Sets Deadline for Final Plan; Committee Authorized to Pursue Fraudulent Transfers; Other Matters Settled or Continued

On or about August 2, 2013, the Court entered an Order converting the previously scheduled Disclosure Statement hearing of August 8, 2013 to a general status conference hearing based on a possible resolution of pending disputes.  The Parties continue to negotiate in an effort to formulate a consensual plan of reorganization for the Debtor that will be acceptable to most creditors.  As a result, the Court entered an Order on August 12, 2013, directing the Debtor to file a final plan of reorganization and disclosure statement by September 23, 2013.

Meanwhile the Court also entered an Order on or about August 9, 2013, granting the Committee’s previously filed Motion for Authority to Prosecute Fraudulent Transfers against FirstMerit Bank, NA , Oz Gas Aviation, LLC , Richard M. Osborne, and Richard M. Osborne Trust.  It is expected that the Committee will refrain from filing such claims while the Parties continue to negotiate a consensual plan.

Additionally, on or about July 13, 2013, the Receiver reached a settlement with the Debtor and RBS regarding the dispute over its fee application.  Per the terms of settlement, the Court entered an Order on July 15, 2013, approving the Receiver’s fees in the amount of $250,000.  On or about July 18, 2013, the Debtor and Wells Fargo agreed to reschedule Wells Fargo’s Evidentiary Hearing on Motion for Relief from the Automatic Stay and Motion to Convert Case from Chapter 11 to Chapter 7 in the affiliated Great Plains Bankruptcy Case for August 29, 2013, wit response due August 22, 2013.

Disclosure Statement Hearing Continued; Wells Fargo Files Motion to Convert GPE

The hearing on the Debtor's Disclosure Statement in support of its Amended Plan of Reorganization previously scheduled for July 11th was again continued to August 8, 2013, at 9:30am in the Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie.

On June 25, 2013, creditor Wells Fargo Equipment Finance, Inc. (“Wells Fargo”) filed a Notice Regarding Request for Evidentiary Hearing on Motion for Relief from the Automatic Stay and a Motion to Convert Case from Chapter 11 to Chapter 7 in the affiliated Bankruptcy Case for Great Plains Explorations, LLC, Case No. 12-10058-TPA.  Wells Fargo’s primary argument is that GPE has had more than adequate time to present a viable plan of reorganization and has failed to do so.  Similarly, Wells Fargo has requested an evidentiary hearing on its previously filed Motion for Relief from the Automatic Stay to determine whether it is still being adequately protected.  Hearings have been scheduled on these matter for July 25, 2013, at 10:00am in the Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie.

Hearing on Debtor's Disclosure Statement Continued

The hearing on the Debtor's Disclosure Statement in support of its Amended Plan of Reorganization previously scheduled for June 6th was continued to July 11, 2013, at 10:00am in at Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie.

Objections Filed to Debtor's Disclosure Statement for Amended Plan

On or before May 30, 2013, several parties filed Objections to the Debtor's Disclosure Statement supporting its First Amended Plan of Reorganization.  The Committee filed an Objection, arguing in part that administrative claims are underestimated, the Debtor’s proposed treatment of creditors is not feasible, and the Debtor’s assets are severely depleted.  RBS filed an Objection, arguing in part that the claims on unsecured creditors are being artificially impaired, the revised financial projections do not support a feasibility finding, and the Plan includes improper third-party releases.  An Objection was also filed by the Ohio Department of Taxation, Ohio Bureau of Workers' Compensation and Ohio Department of Job and Family Services. 

Additionally, the Ohio Department of Taxation, Ohio Bureau of Workers' Compensation and Ohio Department of Job and Family Services and the Lake County Ohio Treasurer attempted to file Applications for Approval of Administrative Claims.  A hearing remains scheduled on the Debtor’s Disclosure Statement for Thursday, June 6, 2013 at 10am.

Debtor Files Amended Plan and Disclosure Statement

On April 22, 2013, the Debtor filed a First Amended Chapter 11 Plan and accompanying Disclosure Statement setting forth its newly proposed treatment of creditors.  A hearing on the Disclosure Statement has been scheduled for June 6, 2013 at 10:00am in the Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, with objections to the Disclosure Statement due by May 30, 2013.  Please feel free to contact us at ozgascommittee@quinnfirm.com to obtain a copy of the Debtor’s First Amended Plan and Disclosure Statement, and/or any other pleadings as filed.

Court Enters Order Granting Objections to Debtor’s Disclosure Statement, Setting Mediation

On March 7, 2013, the Court entered an Order granting the various Objections to the Debtor’s Disclosure Statement and, upon consent of Counsel, denying the Debtor’s Chapter 11 Plan.  The Court further extended the exclusivity period for the Debtor to propose and solicit a plan of reorganization until April 22, 2013, in order to allow the Debtor and RBS to work toward RBS’s crucial assent to any plan by way of mediation.  The Court’s directive with respect to mediation is subject to a key condition, in that the Debtor shall provide RBS with an audited individual net worth statement for the Debtor’s principal, Richard Osborne, on or before March 21, 2013.  Concurrently therewith, RBS shall also provide the Debtor with a detailed statement of its claims.

In the event that such statements are prepared and exchanged, the Debtor and RBS shall have commenced and concluded a mediation on or before April 8, 2013.  Any unexcused failure by Osborne to strictly comply with his obligations under the Order shall be deemed as “bad faith” and will lead to an immediate termination of the exclusivity period.

Objections Filed to Debtor’s Disclosure Statement

On or before February 28, 2013, several parties filed Objections to the Debtor's Disclosure Statement supporting its Plan of Reorganization.  The Committee filed an Objection, arguing in part that administrative claims are underestimated, the Debtor’s proposed treatment of creditors is not feasible, and the Debtor’s assets are severely depleted.  RBS filed an Objection, arguing in part that its liens are being stripped down, the Debtor’s equity holders are retaining their interests without any infusion of cash, and the Plan includes improper third-party releases.  The United States Trustee also filed an Objection, arguing in part that the financial information set forth in the Debtor’s Disclosure Statement is not adequate or feasible. 

Additionally, RBS filed a Motion for Approval of Administrative Claim seeking a superpriority administrative claim on account of its interest in the Debtor’s collateral allegedly not having been adequately protected.  The Debtor also filed a Motion to Extend Exclusive Solicitation Period with respect to the exclusive period during which it may solicit votes for its Plan, citing scheduling issues that cause the need for such an extension.

Finally, updating a previous post, the Committee's Motion for Authority to Prosecute Fraudulent Transfers was continued generally to track the Debtor's Plan confirmation process.  A hearing remains scheduled on the Debtor’s Disclosure Statement for Thursday, March 7, 2013 at 10am.

Court Denies Debtor’s Emergency Motion to Enforce the Automatic Stay against Receiver

Updating a previous post, the Court on February 27, 2013, entered an Order denying the Debtor’s Emergency Motion to Enforce the Automatic Stay (“Motion”) with respect to the efforts of the Receiver, Mark E. Dottore (“Receiver”), to collect its fees from RBS in the Northern District of Ohio.  The Court, in deciding the Motion on its merits, found that the Debtor will not be negatively affected in any significant way by the Receiver’s efforts.

An evidentiary hearing on the Receiver’s Application for Compensation filed in the Bankruptcy Court in Erie has been scheduled for Monday, May 20, 2013 at 9:30am, with a Pre-Trial Conference scheduled for Tuesday, April 30, 2013 at 9:30am.

Debtor Files Emergency Motion to Enforce Automatic Stay Against Receiver

On February 15, 2013, the Debtor filed an Emergency Motion to Enforce the Automatic Stay and Request for Expedited Hearing (“Emergency Motion”) with respect to the efforts of the previously-appointed pre-petition Receiver, Mark E. Dottore (“Receiver”), to collect its fees from RBS in the Northern District of Ohio.  The Debtor argues in part that the Receiver’s efforts violate the stay to the extent that RBS may then charge those fees back to the Debtor on account of its loan obligations.

On February 20, 2013, the Receiver filed a response indicating in part that it had specific authority from the Bankruptcy Court to proceed against RBS, and that such actions do not constitute a violation of the stay protecting the Debtor.  An expedited hearing has been scheduled for Friday, February 22, 2013 at 10am, with responses due by February 21, 2013 at 12pm.

FirstMerit, Debtor Oppose Committee’s Motion for Authority to Prosecute Fraudulent Transfers

Updating a previous post, on or about February 14, 2013, FirstMerit filed an Objection to the Committee's Motion for Authority to Prosecute Fraudulent Transfer Action (“Objection”).  The Debtor also filed a Response in Opposition to Motion for Authority to Prosecute Fraudulent Transfer Action (“Response”, and together with the Objection, “Objections”).  The Objections argue in part that authority to decide whether to pursue such litigation should remain solely with the Debtor and that the cost of pursuing such litigation is greater than the benefit to creditors in light of the Debtor’s proposed Plan of Reorganization. 

Conversely, RBS Citizens, NA s/b/m Charter One Bank, NA (“RBS”) filed a response joining with the Committee’s position.  A hearing remains scheduled for Thursday, February 21, 2013 at 10am.

Court Enters Order Approving Sale to Halcon Energy

On or about January 25, 2013, following a sale hearing, the Court entered an Order Approving Sale of Certain Oil and Gas Leases Free and Divested of Liens (“Order”) with respect to the Debtor’s sale of its Deep Rights to Halcon Energy for $10m.  Upon information and belief, the sale to Halcon has been substantially consummated, and the bulk of the sale proceeds have been paid to the Debtor’s primary secured lender, RBS Citizens, NA, d/b/a Charter One, with the exception of certain holdbacks for administrative expenses subject to further determination by the Court.  A copy of the Order is available upon request to ozgascommittee@quinnfirm.com.

As a result, the Adversary Proceeding filed by the Debtor against Halcon has been closed.

Debtor Files Chapter 11 Plan of Reorganization and Disclosure Statement

On or about January 10, 2013, the Debtor filed its Chapter 11 Plan of Reorganization (“Plan”) and Disclosure Statement setting forth its proposed treatment of creditors.  A hearing on the Disclosure Statement has been scheduled for March 7, 2013, at 10:00 AM in the  Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, with objections to the Disclosure Statement due by February 28, 2013.  Please feel free to contact us at ozgascommittee@quinnfirm.com to obtain a copy of the Debtor’s Plan and Disclosure Statement, and/or any other pleadings as filed.

Committee Files Motion for Authority to Prosecute Fraudulent Transfers

On or about January 17, 2013, the Official Committee of Unsecured Creditors of Oz Gas, LTD (the “Committee”) filed a Motion for Authority to Prosecute Fraudulent Transfers (“Motion”) with respect to payments made by the Debtor to FirstMerit Bank, NA (“FirstMerit”) on account of a loan between FirstMerit and Oz Gas Aviation, LLC (“Oz Aviation”), Richard M. Osborne, and Richard M. Osborne Trust for the purchase of an airplane owned by Oz Aviation.  The total amount of payments made by the Debtor to FirstMerit during the four (4) years prior to the filing of the Bankruptcy Case is approximately $900,000.  The Committee’s Motion seeks standing on behalf of the Debtor to pursue such an action on account of the Debtor’s inherent conflict of interest and refusal to do so.    

A hearing on the Motion has been scheduled for February 21, 2013, at 10:00 AM in the  Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, with responses to the Motion due by February 14, 2013.

Debtor Files Sale Motion; GPE Dismisses Complaint Against 1st Source

Updating previous posts, on or about December 12, 2012, the Debtor filed its Motion to Sell Certain Oil and Gas Leases Free and Divested of Liens (“Sale Motion”) pursuant to the Court’s previous Order of November 21, 2012.  Objections/Responses to the Sale Motion were filed by Interested Party Mark E. Dottore, Creditor Reserve Energy Exploration Company, and Creditor RBS Citizens, NA, s/b/m Charter One Bank.  The proposed sale to Halcon remains scheduled for public hearing and auction on January 25, 2012.

Additionally, on or about December 31, 2012, Great Plains Exploration, LLC (“GPE”) moved to voluntarily dismiss its Complaint for Injunctive Relief against 1^st Source Bank (“Complaint”).  The Court entered an Order on January 2, 2013, dismissing the Complaint with prejudice and declining to extend the automatic stay to GPE’s principal, Richard Osborne.