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Samson Resources Corp. Still Battling Junior Creditors in Bankruptcy Court

chapter 11.jpgAccording to recent media reports, Samson Resources Corp has a signed an updated reorganization agreement in hopes of exiting the Chapter 11 bankruptcy process. The oil and gas drilling company originally filed for Chapter 11 bankruptcy protection in September of 2015. However, since that time, the company has been in a battle with some of its creditors over its restructuring plan. The company hopes that its revised Chapter 11 reorganization plan will finally get approval from objecting creditors or alternatively allow it to defeat them in bankruptcy court. Once either occurs, the company will be able to move forward in the Chapter 11 process.

How to Get a Chapter 11 Reorganization Plan Approved

A Chapter 11 bankruptcy plan gives a financially distressed company an opportunity to restructure its obligations so that it can emerge on a sustainable path. However, a Chapter 11 plan must be approved before it can be officially enacted. There are two primary methods that can be used to get a Chapter 11 plan approved.

First, the creditors can vote in favor of the plan. In order to move forward, every class of creditor must support the plan. If a company is unable to get voluntary approval from creditors, there is another option available: a bankruptcy court can approve the plan over the objections of creditors. This is known as a cramdown. Governed by Section 1129 of the U.S. Bankruptcy Code, a cramdown can only proceed if a bankruptcy judge agrees that the proposed plan treats the objecting class of creditors in a 'fair and equitable manner.'

Currently, Samson Resources Corp. is struggling to get its Chapter 11 plan approved by its junior creditors. Junior creditors comprise a class of creditors who have a claim that is subordinate to another class of creditors. Essentially, this means that another class of creditors will need to be paid off in full before the junior creditors will be able to receive any payment.

As it stands now, the junior creditors of Samson Resources believe that they are not being fairly treated by the restructuring plan proposed by the company. They want an opportunity to present their own competing plan. If Samson Resources and the objecting creditors cannot agree to the terms of the revised Chapter 11 restructuring plan, a bankruptcy court will need to step in to determine how the case will proceed.

Contact Our Office Today

If your California business is in need of financial reorganization, the dedicated San Jose Chapter 11 bankruptcy attorneys at Diemer, Whitman & Cardosi, LLP can help. Our team has helped many distressed businesses get their Chapter 11 reorganization plan approved by creditors. To learn more about what we can do for your company, please contact our San Jose office today to set up your free initial case evaluation. Our firm proudly represents businesses throughout the region, including in Santa Clara County and San Mateo County.

Sources:

http://www.wsj.com/articles/samson-outlines-revised-chapter-11-exit-plan-1472479825

http://www.bloomberg.com/news/articles/2015-09-17/kkr-s-samson-resources-files-bankruptcy-as-shale-bet-sours

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