Samson Resources reported promising interest Thursday in a second round of bids for some of the bankrupt company’s assets, while also getting a fight with unsecured creditors for control of the company’s $4.2 billion Chapter 11 case delayed until September.
The good news for Samson could be offset, however, by signs that creditors will be spending the rest of the summer warming up challenges to billions in company liens, and continuing talk of a potential post-exit inquiry into a $7.2 billion leveraged buyout of the company in 2011.
Samson attorney Ross M. Kwasteniet of Kirkland & Ellis LLP said the company recommended a decision on the company’s bankruptcy plan confirmation schedule be postponed in light of the sale developments and continuing talks on the company’s current exclusive control of the plan.
“We have a difference of opinion with the [unsecured creditor] committee about how that should proceed," Kwasteniet said before Judge Christopher S. Sontchi agreed to hear the issue on Sept. 7.
Company officials are in the middle of a second round of bid solicitations for its assets, Kwasteniet said, with a possible minimum-bid “stalking horse” auction to be developed for late October. The company’s disclosure statement will be updated once bids are in hand, he added.
Last week, Samson’s Official Committee of Unsecured Creditors accused the company in a court filing of using its control as a “sword” to suppress alternative bankruptcy approaches or questions about the 2011 leveraged buyout of the company. The issue had been scheduled for a hearing Thursday, but was postponed after nearly an hour of private negotiations.
Much of Samson's debt came from a $7.2 billion leveraged buyout from the founding Schusterman family in 2011 led by Kohlberg Kravis Roberts & Co. LP affiliates and investors Crestview Partners, ITOCHU Corp. and Natural Gas Partners.
In a court filing, the unsecured creditor committee claimed the company's primary goal is "ensuring that neither the sponsors, the board, or management ever have to answer for a situation in which $3 billion of funded unsecured debt, borrowed only four years ago, are slated to receive only a few pennies on the dollar on their claims."
On Thursday, unsecured creditor committee attorney J. Christopher Shore of White & Case LLP said the company’s best path forward has yet to be determined, particularly if bids are not “robust enough.”
“Given that, and where we are in the process, we think we’re really 30 to 60 days away from getting a sense of how these cases are going to proceed,” Shore said.
Although Samson had previously proposed an Aug. 19 hearing on the company’s bankruptcy plan disclosure statement, the Office of the U.S. Trustee filed an objection declaring the “preposterousness” of the timetable .
“Here, where the parties in interest are contesting exclusivity and there is a likelihood there could be competing plans, it is premature to set a litigation schedule before determining these issues,” David L. Buchbinder, attorney for the Office of the U.S. Trustee, said.
Samson originally anticipated a quick exit from bankruptcy after seeking Chapter 11 protection in September with a plan that would have rapidly shed $3 billion in debt.
Plummeting oil and natural gas prices, creditor and landowner pressures, and defections of top officers all complicated the picture.
In May, the unsecured creditor committee stepped up pressures, seeking a break in the company’s Chapter 11 control. The committee also reported that its investigations into claims and causes of action against the plan’s sponsors revealed “significant issues” involving the 2011 leveraged buyout, associated collateral grants by secured lenders at the time of the LBO, and lender conduct afterward.
At the time of the LBO, family owned Samson ranked as one of the country's biggest private energy companies, operating more than 4,000 oil wells and holding an interest in more than 12,500 production sites..
Samson is represented by James Sprayregen, Paul Basta, Edward Sassower, Ross Kwasteniet, Brad Weiland, Yosef Riemer and Joshua Sussberg of Kirkland & Ellis LLP and Morton Branzburg of Klehr Harrison Harvey Branzburg LLP.
The committee is represented by Joseph J. Farnan Jr., Joseph J. Farnan III and Michael J. Farnan of Farnan LLP and Thomas E. Lauria, Glenn M. Kurtz, J. Christopher Shore, Michele J. Meises and Thomas MacWright of White & Case LLP.
The case is In re: Samson Resources Corp., case number 1:15-bk-11934, in the U.S. Bankruptcy Court for the District of Delaware.
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