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Black Elk Energy Offshore Operations Objections Filed

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The United States, on behalf of the United States Department of Justice, McMoran Oil & Gas, Merit Energy Company, and W&T Offshore filed with the U.S. Bankruptcy Court separate objections to Black Elk Energy Offshore Operations Disclosure Statement, pursuant to 11 U.S.C. Section 1125 for Chapter 11 Plan of liquidation.

The Unites States asserts, “The chapter 11 plan, as currently proposed, cannot be confirmed because it does not provide for payment in full of the United States’ administrative expense claims in cash on the effective date of the plan and the United States has not agreed to a different treatment of its claims…Contrary to the Debtor’s assertions, the United States’ substantial claims against the Debtor’s estate for its decommissioning and Maintenance and Monitoring Obligations…cannot be reduced to $0.00 and are, in fact, substantial. Thus, the Plan cannot be confirmed because it violates Section 1129(a)(9) of the Bankruptcy Code on its face. In addition, regardless of any proposed abandonment of the OCS properties that the Debtor may be requesting from this Court pursuant to its Plan, this Court cannot permit abandonment of the Debtor’s corresponding, but independent, regulatory obligations that are intended to protect the environment and the public health and safety….The Disclosure Statement also fails to provide ‘adequate information’ as required by Section 1125(a)(1) of the Bankruptcy Code because, among other things, the Disclosure Statement: (i) fails to accurately describe the Debtor’s joint and several liability for decommissioning obligations on all properties on the Outer Continental Shelf (the ‘OCS’) in which the Debtor is either a record title interest owner or an operating rights owner; (ii) fails to provide that a Debtor cannot sell, transfer or assign any of its interests in its OCS leases without the explicit approval of The Bureau of Ocean Energy Management; (iii) sets forth the Debtor’s intention to abandon the OCS properties in which the Debtor has an interest, regardless of the Supreme Court’s Midlantic holding; and (iv) fails to indicate that the United States disputes reduction of the Debtor’s decommissioning obligations to $0.00 and, in fact, believes that such obligations are substantial.”

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