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.

Halcon’s Motion for Summary Judgment Denied; Great Plains Exploration files Motion to Continue Injunction/Temporary Restraining Order

On or about October 19, 2012, Halcon filed a Motion for Summary Judgment (“Motion”) against the Debtor with respect to the Debtor’s Complaint for Injunctive Relief (“Complaint”), as mentioned in previous posts.  On October 23, 2012, the Court entered an Order denying Halcon’s Motion primarily because the Debtor’s Complaint is already on a fast track for trial and Halcon’s Motion is not timely.  As a result, the matter remains scheduled for trial beginning on Monday, November 19, 2012, at 9:30am at Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie.

In addition, Great Plains Exploration, LLC (“GPE”), an entity affiliated with Oz Gas, Ltd., filed in its own Bankruptcy Case a Complaint for Injunctive Relief (“GPE Complaint”) against 1^st Source Bank in an effort to extend the benefits of the automatic stay to its principal, Richard Osborne.  GPE filed the GPE Complaint to protect Mr. Osborne from 1^st Source Bank’s collection efforts in Indiana state court to the extent that it views him as an important source of funding for any proposed plan of reorganization.  Because Mr. Osborne is also viewed as an important source of funding for any proposed plan of reorganization in the Oz Gas, Ltd. Bankruptcy Case, the Oz Gas Committee has joined in GPE’s efforts to extend the automatic stay.  Those matters remain pending before the Court.

Bank & Committee File Opposition to Debtor’s Exclusive Right to File a Plan; Trial with Halcon Set

On September 4, 2012, the Debtor filed its Second Motion to Extend Exclusivity Period for Filing a Chapter 11 Plan and Disclosure Statement (the “Motion”), which affects the Debtor’s exclusive right to file a plan of reorganization without competing plans from interested parties.  On October 5, 2012, RBS Citizens, NA s/b/m Charter One Bank, NA (the “Bank”) filed a Response in Opposition to the Debtor’s Motion, asserting that the Debtor’s efforts have not been productive and that any interested party should be allowed to file a plan of reorganization or liquidation.  The Committee thereafter joined in the Bank’s Response in Opposition. 

As a result, the Court entered an Order granting the Debtor’s Motion, except with respect to the Bank and the Committee.  Per the terms of the Order, the Debtor’s exclusive right to file a plan expires thirty (30) days after the Bank or Committee exercise their right to send notice to the Debtor terminating the same.

In addition, updating a previous post, Halcon filed on September 18, 2012, an Answer, New Matter, and Counterclaim to the Debtor’s Complaint for Injunctive Relief.  On September 24, 2012, the Debtor filed an Answer to Halcon’s Counterclaim.  A Trial Date has been scheduled for November 19, 2012, at 9:30am at Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie.

Debtor Files Complaint for Injunctive Relief Against Halcon Energy

On August 30, 2012, the Debtor filed a Complaint for Injunctive Relief against Halcon Energy Properties, Inc. at Adversary Proceeding Number 12-1092 (TPA) with respect to the previously Court-approved purchase agreement and Sale Order between the Parties.  The Complaint essentially seeks to compel Halcon to effectuate a closing of the sale as a result of an ongoing dispute as to whether certain obligations have been met under the terms of the purchase agreement.  Concurrently therewith the Debtor also filed a Motion for Preliminary Injunction and Motion for Temporary Restraining Order (the “Motion”) in order to preserve certain deadlines from lapsing under the terms of the sale agreement. 

In light of the injunctive relief requested, the Court immediately scheduled a telephonic hearing for August 31, 2012 at 2:00pm.  After the hearing the Court entered an Order staying all deadlines, requirements, and/or obligations described in the purchase agreement and/or Sale Order until the remaining matters raised in the Debtor’s Motion are heard by the Court.  A subsequent hearing will be scheduled regarding the same.

Order Entered Approving Sale to Halcon Energy

Updating a previous post, a hearing on the sale of substantially all of the Debtor's assets was held before the Court on August 16, 2012.  After the hearing, the Court entered an Order approving the sale of the Debtor's assets to Halcon Energy.  The parties are attempting to work together to resolve any issues that remain so that the closing of the transaction may occur in a timely manner.  

Please feel free to contact us at ozgascommittee@quinnfirm.com to obtain a copy of the Sale Order, and/or any other pleadings as filed.

Bar Date to File Proof of Claim About to Expire

Updating an earlier post, the Bankruptcy Court on March 30, 2012, entered a Notice setting the deadline for all creditors to file a proof of claim in the Bankruptcy Case for August 9, 2012.  All claims must be filed by that date in order to receive potential distributions thereon.