LOS ANGELES – Danning, Gill, Israel & Krasnoff, LLP represented  Michael A. McConnell, the Chapter 11 trustee (the “Trustee”) for the estate of HVI Cat Canyon, Inc. (“HVI”), which owned approximately 1,000 oil wells, most of which were idle or not performing.  The $26.75 million sale of the oil and gas assets located in Santa Barbara and Kern Counties closed on October 26, 2020.  HVI is affiliated with Rincon Island Limited Partnership that went through its own bankruptcy commenced in 2016.  The Trustee also closed a second sale for oil wells located in Orange County.  The Trustee was represented throughout by Danning Gill Partner Eric P. Israel.

The HVI bankruptcy case was filed in the Southern District of New York on July 25, 2019, transferred to the Southern District of Texas, and then transferred to the Northern Division of the Central District of California.  The Bankruptcy Court directed the appointment of a Chapter 11 trustee on motion by the State of California and others.  The Trustee was able to procure post-petition financing via a series of loans from the main creditor, UBS AG, and ultimately borrowed approximately $13.5 million.  With those funds, the Trustee operated the company for approximately one year.  During that time, the global price of oil crashed due to a price war between Russia and Saudi Arabia, and the effects of the COVID pandemic on global demand for crude oil.

In order to improve marketability of the company, the Trustee converted the company into a stand-alone vehicle instead of being part of a conglomerate of affiliated entities.  As part of the process, the Trustee rejected contracts with insiders and affiliates that had provided office space, equipment rentals, back office services and even sales of its product, replacing those arrangements with insiders and affiliated entities to third party vendors at market prices.

According to Mr. Israel, “The sale was complex, requiring settlements with numerous diverse parties in interest, including over 500 mineral owners, numerous governmental regulatory agencies and several secured creditors, and the County of Santa Barbara for many millions of dollars in real property taxes owed.  Ultimately, the mineral owners agreed to waive pre-petition back royalties of about $13 million in order to procure a responsible new operator.”

UBS was represented by O’Melveny & Myers, LLP.  The Official Committee of Unsecured Creditors was represented by Pachulski, Stang, Ziehl & Jones, LLP.  CR3 Partners was the Trustee’s financial analysts.

WWD

August 30, 2020

A number of retailers that filed for Chapter 11 bankruptcy in the early months of the COVID-19 crisis are now at the finish line or close. To get here, retailers sought financing while facing the risks that come with months-long store closures, then reopened stores during the ongoing pandemic and struck deals with creditors, lenders, and in some cases, buyers. 

While the proceedings so far have shown courts willing to accommodate retailers’ requests and defer to their business judgment, there are still questions of long-term survival, bankruptcy attorneys said. 

“I think there’s going to be a tendency to approve things that may be less likely to be approved in a more healthy market environment,” said Zev Shechtman, partner at Danning Gill Israel & Krasnoff LLP.

“But in order to exit from bankruptcy, companies need to have a viable business plan going forward,” he said. “The question is, where is the money coming from on a going-forward basis?” 

“Bankruptcies can be really successful for reorganizations when there is an exit, a light at the end of the tunnel,” said Shechtman of Danning Gill.  “The bankruptcy story will be mirroring the general economic story in many ways,” he said. “If there is no end in sight for the economy, bankruptcy is not a silver bullet.”

To read the full article, click here.

Daily Journal

July 28, 2020

Danning Gill Partner John Tedford was quoted in a July 28, 2020 article in the Daily Journal about trends in bankruptcy filings in the United States and California.

According to recent U.S. Bankruptcy Court statistics, overall, bankruptcy filings are down nationally and in California, as the worst may be yet to come.

‘It’s not a big surprise, what is a surprise is we haven’t seen a boom over the last couple of months in bankruptcy filings despite all the relatively bad news, “ says Tedford, who handles bankruptcies for businesses on the debtor and creditor side. He said the court is on pace to have the same number of Chapter 11 cases filed this year as in each of the last five years.

To read the full article, click on the link below (subscription required).

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