ERG Intermediate Holdings LLC and its affiliates have canceled the 363 sale process and instead, will file a plan of reorganization, the companies said Aug. 12. The companies—including ERG Resources Inc. LLC, ERG Operating Co. LLC, ERG Interests LLC and West Cat Canyon LLC—filed for Chapter 11 bankruptcy protection in the Northern District of Texas on April 30.
The companies’ assets have over time included areas on the U.S. Gulf Coast and in California, the Illinois Basin, Texas and Louisiana, according to ERG Resources LLC’s website.
No acceptable bid was received under the bidding and sale procedures approved by the bankruptcy court. Instead, the lenders provided a proposal for a plan of reorganization. They will provide exit financing to maintain, and possibly expand, the companies’ California assets and operations.
Kelly Plato, the sole manager of the companies, said that the plan of reorganization provides the best opportunity to maximize the companies’ value.
Also, on Aug. 7, the companies' unsecured creditors' committee filed a motion seeking approval for the compromise of controversies in accordance with a settlement and transaction support agreement between the lenders and the committee.
A liquidation trust will be established, among other terms. The lenders will initially fund it, and it will receive the companies’ assets, excluding those related to California operations. The bankruptcy court in the Northern District of Dallas will consider the committee's request at a hearing scheduled for Aug. 25.
ERG Resources LLC is based in Houston.
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