Breitburn Energy Bankruptcy Agreement Filed


Breitburn Energy Partners filed with the U.S. Bankruptcy Court a motion seeking authority to enter into swap agreements, pledge collateral, grant D.I.P. super-priority claims and honor obligations thereunder and enter into a fourth amendment to its post-petition senior secured super-priority financing agreement.

The motion explains, “The benefits of entering into the Swap Agreements immediately are twofold. First, much like the Debtors’ prepetition hedging arrangements, the Swap Agreements are a critical tool that the Debtors can use to insulate their business from price fluctuations, consistent with industry and the Debtors’ historical practice. Absent the stability provided by the Swap Agreements, the Debtors could experience a significant decrease in EBITDA. Second, the Debtors believe that entry into the Swap Agreements will be necessary to satisfy the minimum hedging requirements that likely will be contained in any exit financing facility to be entered into in connection with the consummation of a plan of reorganization in these cases.”

In addition, “To secure the Swap Obligations, the Debtors have agreed to provide the Lender Counterparties with DIP Liens and also have agreed to grant the Lender Counterparties DIP Superpriority Claims on account of the Swap Obligations, in each case consistent with the terms of the Final DIP Order. The DIP Liens and DIP Superpriority Claims granted to the Lender Counterparties will be paripassu with the DIP Obligations. In this connection, the Debtors seek the Court’s approval of that certain Fourth Amendment to Debtor-in-Possession Credit Agreement….The Fourth Amendment makes certain limited but necessary changes to the DIP Credit Agreement to allow for the Debtors to enter into the Swap Agreements and to provide the liens and superpriority claims.”

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