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Samson Settles with Creditors to End Ch. 11 Plan War

The major players in the Samson Resources Corp. bankruptcy said Friday they'd come to a deal that aims to end the fierce squabbling in the oil and gas company's Chapter 11 case to restructure some $4 billion in debt, and sets out to pay unsecured creditors at least $168.5 million.
In a notice filed with the Delaware bankruptcy court, Samson, its first- and second-lien secured creditors and the official committee of unsecured creditors said they are going to ask U.S. Bankruptcy Judge Christopher S. Sontchi to approve the global settlement, which contemplates a reorganization strategy retaining the second-lien lender debt-for-equity swap, at a hearing scheduled for Jan. 11.
"Pursuant to the global settlement, the settling parties are negotiating and expect in the near future to finalize and file the joint global settlement plan, together with an amended joint global settlement disclosure statement and certain other related documents," the notice states.
A representative of Samson declined further comment when contacted Friday. Representatives of the unsecured creditors committee did not immediately respond to a request for comment.
The Samson case had found itself in the rare position of two competing Chapter 11 plans set to go head-to-head before Judge Sontchi in March, one from the debtor and the other put together by the creditors committee.
The debtor's plan involved swapping out second-lien debt for equity in a reorganized company, but left little for lower-priority unsecured creditors, while the committee's plan contemplated liquidating the company to generate creditor recoveries.
The sides had been at tense, acrimonious loggerheads for months, but the settlement on Friday would create on consensual Chapter 11 plan that both retains the debtor's core strategy and provide a recovery for unsecured creditors.
Under the deal, unsecured creditors would be beneficiaries of a trust to receive a $168.5 million cash settlement payment that must be paid by the end June.
The the trust is not fully funded by June's end, unsecured creditors would then be owed $180 million, plus 10 percent interest until paid, according to the notice.
The unsecured creditors' settlement fund also must be funded with at least $100 million by April 15, or the parties will draw up plans to sell Samson’s assets to generate enough money to reach that goal, the notice states.
Second-lien lenders would still see their debt swapped for equity, subject to dilution by a management incentive plan, and first-lien creditors would be slated for a full recovery in cash and new debt, according court records.
Samson, which operates or has royalty or working interests in about 8,700 oil and gas wells, filed for Chapter 11 protection in September 2015 listing more than $4 billion in debt, and citing many of the same bearish forces in the energy commodity market that have sent many of its peers flocking into bankruptcy court.
Much of the debt stemmed from Samson's 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, according to court records.
The company's path to potential plan confirmation has been a rocky one. Samson did come into Chapter 11 with a restructuring support agreement in hand that fell apart as volatility in the energy market continued unabated.
Samson was also hit with a competing plan after losing exclusive control over its case when Judge Sontchi refused to grant an extension and said the debtor had not dealt with its unsecured creditors in good faith.
Enmity between the unsecured creditors and Samson has only grown during the case, with an attorney for the committee calling the debtor's plan a "declaration of war," and Samson at one point seeking sanctions on accusations the creditors were interfering with sale solicitations.
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.