Multiple parties – including Boaz Energy II, Texas Comptroller of Public Accounts, Jeffrey Olyan and Aera Energy – filed with the U.S. Bankruptcy Court separate objections to Memorial Production Partners’ Amended Joint Plan of Reorganization.
Aera Energy asserts, “Without any explanation as to how they can be permitted to now disavow this carefully orchestrated regulatory arrangement, via their Proposed Plan the Debtors propose to unilaterally withdraw these $152 million in trust funds. But the Debtors cannot take what is not theirs, just as this Court cannot exercise jurisdiction over property that is not an asset of the Debtors’ estates. The Beta Trust Funds…are not property of the Debtors’ estates because they are assets held by an irrevocable regulatory trust established by the Debtors’ predecessors-in-interest, to which the Debtors have only springing contingent rights once the applicable plugging and abandonment obligations are fulfilled.”
In addition, “Moreover, even if the Debtors could manufacture a dispute over such trust funds…that dispute undoubtedly would have to be brought via an adversary proceeding, subject to mandatory withdrawal of the reference, and not via plan confirmation hearings….Finally, even if each of these obstacles could be overcome, the Proposed Plan would still be unconfirmable for the independent reason that, in the face of the rejection of the Proposed Plan by the class to which Aera’s ‘claims’ have been assigned (i.e., Class 3), Aera is not being offered the required ‘indubitable equivalent’ treatment, even if the law could be applied to permit the Debtors’ proposed treatment of Aera’s interests in the Beta Trust Funds.”
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