Merit Energy filed with the U.S. Bankruptcy Court an objection to Chaparral Energy’s Joint Plan of Reorganization.
The objection asserts, “Debtors recently filed an adversary proceeding asking the Court to force Merit and other unidentified parties to sell their interest in a carbon dioxide pipeline pursuant to section 363(h) of the Bankruptcy Code. While such a sale should not be approved if the ‘detriment’ to co-owners will exceed the sale’s benefits, Debtors’ proposed sale process risks substantial damages to Merit and others if a sale is allowed to go forward. Significantly, Debtors’ Plan does not provide for claims – administrative or otherwise – that would arise from a forced sale of Merit’s pipeline interest. Moreover, Debtors apparently did not disclose the sale process or possibility of such claims until they amended the Plan on March 7, 2017.”
In addition, “Instead, Debtors propose confirming the Plan and having the Plan’s Effective Date occur prior to the time the sale could possibly be authorized. Merit objects to the Plan to the extent it fails to provide a reserve or other mechanism to protect against its potential damages claim should a sale of its pipeline interest be authorized through the pending adversary proceeding and further objects to the extent Debtors failed to disclose these issues as part of the solicitation process.”
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