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.