Bid Procedures Approved, Sale Hearing Scheduled

After a series of supporting filings and hearings, the Bid Procedures Motion was approved by the Court on June 14, 2012.  As a result, the Sale Hearing will be held on August 16, 2012 at 10:00 a.m. in the Erie Bankruptcy Courtroom.  Any objections to the sale motion (which was subsequently filed on June 19, 2012) are due on or before August 9, 2012.

Potential bidders at the Sale Hearing must satisfy a number of requirements; but most importantly, they must either submit a $1,000,000 deposit 5 days or more prior to the Sale Hearing date or a $5,000,000 bid not less than 24 hours prior to the Sale Hearing.  In the Bid Procedures Motion and the purchase agreement attached thereto, the initial bid is $2,500/acre for deep rights in oil and gas leaseholds of up to 7,346.56 acres, for a total initial offer of $18,411,400.00.  This initial bid is, however, subject to downward adjustment if there are issues with any of the leases – adjusted down $2,500/acre for each lease that does not meet the requirements set forth in the purchase agreement.

In conjunction therewith, the Debtor also filed a schedule of its easements that may be assumed and assigned as to the interests subject to sale, and the cure amount with respect to any defaults on such contracts.  Any objections to the assumption and assignment of any contracts listed must be filed no later than August 3, 2012.

Debtor Files Bid Procedures Motion for Upcoming Sale

On May 25, 2012, the Debtor filed an Expedited Motion for an Order Approving (A) Bidding Procedures For the Sale of  the deep rights in certain oil and gas leases of Debtor, (B) Break-Up Fee Related to the Sale, (C) Assumption and Assignment Procedures for Surface Agreements, (D) Payment of Pre-Petition Royalties and (E) Form and Manner of Sale Notice ("Bid Procedures Motion"), which would govern the sale of certain leases in Warren and Forest Counties that the Debtor had been previously marketing.  While the sale motion has not yet been filed, a copy of the purchase agreement and the list of subject wells are attached to the Bid Procedures Motion.  A hearing was initially scheduled on this matter for June 6, but the hearing is now set for Wednesday, June 13, at 10:00 a.m. in the Erie Bankruptcy Courtroom, U. S. Courthouse, 17 South Park Row, Erie, PA 16501.  Judge Agresti has indicated that he has questions regarding the proposed procedures and will issue an order on the matters he would like addressed before the hearing. 

Please feel free to contact us at ozgascommittee@quinnfirm.com to obtain a copy of the Debtor’s Bid Procedures Motion, and/or any other pleadings as filed.

Debtor Files Motions to Extend Time to Assume/Reject Leases and File Plan of Reorganization

On May 8, 2012, the Debtor filed a Motion to Extend Time to Assume or Reject Unexpired Leases of Nonresidential Real Property pursuant to 11 U.S.C. § 365(d)(4)(B)(i).  The Debtor filed this Motion for the purposes of allowing more time to attempt to sell those leaseholds of deep oil and gas rights that it currently holds.  A hearing on this Motion has been scheduled for June 21, 2012 at 10:00a.m., in the Erie Bankruptcy Court, 17 South Park Row, Erie, PA, with responses due June 14, 2012.

In addition, the Debtor also filed a Motion to Extend Exclusive Period to File a Plan and Disclosure Statement pursuant to 11 U.S.C. § 1121(d).  To the extent that the Debtor is attempting to sell its leasehold rights, in addition to other assets, for the purposes of formulating and funding a plan to pay its creditors, it now seeks more time during which to accomplish that before it must submit a plan to the Bankruptcy Court.  This Motion has also been scheduled for hearing on June 21, 2012 at 10:00a.m., with responses due June 14, 2012.

First Meeting of Creditors Scheduled; Bar Date to File Proofs of Claims Set

On March 30, 2012, the Bankruptcy Court entered a Notice scheduling the Debtor’s First Meeting of Creditors for Friday, May 11, 2012, at 11 a.m. in Bankruptcy Court Conference Room B110, U.S. Courthouse, 17 South Park Row, Erie.  The Notice also set the deadline for all creditors to file a proof of claim in the Bankruptcy Case for August 9, 2012.

Orders Entered Approving Debtor's Use of Cash Collateral and Broker; Debtor Files Completed Petition, Schedules, & Monthly Operating Reports

On or about March 22, 2012, the Debtor's Final Order Authorizing Use of Cash Collateral was entered by the Court.  Essentially the Debtor will be permitted to use cash in accordance with the approved budget to continue operations unless or until the bank or another interested party files a motion to terminate that authority.  In addition, on or about March 27, 2012, a modified Order was entered approving the Debtor's Broker, Joseph W. Haas and Reserve Energy Exploration Company, for the purposes of assisting the Debtor with the marketing and sale of certain of its oil and gas leaseholds.

Also on or about March 26, 2012, the Debtor filed its completed bankruptcy petition and schedules, which include information related to all of the Debtor's unsecured creditors, in addition to a listing of all of the Debtor's other debts, assets, liabilities, contracts, and certain other financial transactions over the last year or so.  Finally, the Debtor has also filed its first two (2) monthly operating reports ("MORs"), which generally contain information related to the Debtor's gross receipts and disbursements, including copies of the Debtor's bank statements and payroll.  The Debtor will continue to file MORs on a monthly basis.  Please feel free to contact us at ozgascommittee@quinnfirm.com to obtain a copy of the Debtor’s completed petition and schedules, MORs, and/or any other pleadings as filed.

Debtor Moves for Approval of Oil & Gas Leasehold Broker, Court Enters Orders Regarding Employment of Certain Professionals

On or about March 2, 2012, the Debtor filed a Motion to Assume Broker Agreement and an Application to Employ Broker, which seek to maintain the pre-existing/pre-petition relationship the Debtor has with Joseph W. Hass and Reserve Energy Exploration Company.  If approved, the proposed employment will allow Reserve Energy Exploration Company to continue assisting the Debtor with the marketing and sale of certain of its oil and gas leaseholds in Pennsylvania.  An expedited hearing on the Motion and Application have been scheduled for March 22, 2012, at 3:00 p.m. in the Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, with responses due by March 21, 2012 at 12:00 p.m. 

Additionally, on or about March 7, 2012, the Bankruptcy Court entered an Order Approving Counsel for Creditors’ Committee, which confirmed the appointment of Lawrence C. Bolla, Esq. and the Law Firm of Quinn, Buseck, Leemhuis, Toohey and Kroto, Inc. as Counsel to the Official Committee of Unsecured Creditors.  An Order approving the application of James E. Sprague and Walthall, Drake & Wallace, LLP as Debtor's Accountant was entered as well.  The Debtor's Application to Employ Richard N. Selby, II, Melvyn E. Resnick, Jodi Littman Tomaszewski, Erik L. Walter and Howard S. Rabb and the law firm of Dworken & Bernstein Co., L.P.A. as Special Counsel was previously withdrawn.

Deadlines Set for Responses to Entry of Final Order Approving Debtor's Use of Cash Collateral and Additional Pleadings

On 2/15/12, the Bankruptcy Court entered a Second Interim Order Authorizing Use of Cash Collateral (“Order”) with respect to the Debtor's continued access to operating funds during the pendency of its Bankruptcy Case.  Concurrently therewith the Court also scheduled a hearing on the final entry of the Order for 3/22/12 at 3:00 p.m. in the Bankruptcy Courtroom, U.S. Courthouse, 17 South Park Row, Erie, with responses to the Order due by 3/15/12.  If no responses are filed, the hearing will be cancelled and the Order will become final.

Also on 2/15/12 the Bankruptcy Court scheduled a hearing on the Motion by Debtor for Entry of Administrative Order Regarding Interim Payment of Compensation and Reimbursement of Expenses of Professionals for 3/22/12 at 3:00 p.m. in the Bankruptcy Courtroom, with responses to the Motion due by 3/15/12.  


In addition, the Debtor's Application to Employ Richard N. Selby, II, Melvyn E. Resnick, Jodi Littman Tomaszewski, Erik L. Walter and Howard S. Rabb and the law firm of Dworken & Bernstein Co., L.P.A. as Special Counsel and the Debtor's Application to Employ James E. Sprague and Walthall, Drake & Wallace, LLP as Accountants are currently scheduled for hearing on 3/8/12 at 9:30 a.m., with responses to the Applications due by 3/1/12.  An Order Granting Application to Employ Bernstein Law Firm, P. C. as Attorney for Oz Gas, LTD was previously entered on 2/7/2012.