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. 

Court Enters Order Finally Approving Sale Option Settlement Proposal

On November 21, 2012, the Court entered an Order finally approving the settlement between the Debtor and Halcon (“Order”), which constitutes the sale to Halcon of all of the Debtor's leases and assets, as is where is, for $10,000,000.  On or before December 12, 2012, the Debtor must file a Sale Motion setting forth the terms of the proposed sale to Halcon and indicating that such sale is subject to higher offers at a public hearing and auction.  The sale hearing has been scheduled for January 25, 2012 at 10:00a.m. in the Erie Bankruptcy Courtroom, U.S. Courthouse, 17 S. Park Row, Erie, PA 16501.  Responses to the Sale Motion shall be filed on or before December 28, 2012.

The Debtor’s advertisement of the sale will inform Potential Bidders that due diligence materials related to the Subject Interests are available for review.  Per the terms of the Order, any Potential Bidder is one who (i) has executed an appropriate confidentiality agreement and (ii) the Debtor or Broker reasonably believes is capable of submitting a Qualified Bidder Deposit of $1,000,000.  In order to be eligible to participate in the auction, each bidder must be determined to be a Qualified Bidder, which is a Potential Bidder that has submitted a Qualified Bidder Deposit and has submitted documentation evidencing sufficient financial resources and legal capacity to consummate the transaction.  

Any successful bidder shall pay Debtor’s counsel in escrow within ten (10) calendar days of the entry of an order confirming the sale.  Any successful bidder will accept the form and substance of all Ratifications of Leases in the Debtor’s possession as currently proposed, subject to further consent to amend in the interim.  A copy of the Order more thoroughly setting forth all of the specific requirements for any bidder and for the sale is available upon request to ozgascommittee@quinnfirm.com.