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.