Since we often notice the sale of mineral rights or services companies in bankruptcy, we thought we would highlight one of those deals this week. You can read the entire sale motion for free and contact counsel for the Unsecured Creditors Committee to learn more about the bid process by clicking on the link below:
Assets of a Louisiana Oilfield Services Company
Snippet from the Sale Motion
NOW INTO COURT, through undersigned counsel, comes the Unsecured Creditors Committee (the “UCC”) who hereby moves this Honorable Court for an order (the “Motion”): (i) approving the notice of bid procedures attached hereto as Exhibit A; and (ii) authorizing Kraemer-Shows Oilfield Services, LLC (the “Debtor” or “Seller”) pursuant to 11 U.S.C. § 363 to sell certain assets of the Debtor as identified herein pursuant to the Summary of Proposed Terms for the Sale of Assets to Terra Oilfield Solutions, LLC, with attached draft asset purchase agreement (the “Agreement”) attached hereto as Exhibit B with Terra Oilfield Solutions, LLC (“Terra”) for the purchase price of $600,000.00 or to a higher bidder at an auction
conducted under the auspices of this Court on August 19, 2014 at 11:00 a.m., (Terra or such higher bidder being hereafter referred to as “Buyer”). In support of its Motion, the UCC contends as follows:
BACKGROUND AND PROCEDURAL HISTORY
A. Bankruptcy Filing and Debtor-in-Possession.
On February 3, 2014, the Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”). The Debtor continues to operate its business and manage its assets as a debtor-in-possession in accordance with sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed pursuant to section 1104 of the Bankruptcy Code. On April 17, 2014, the United States Trustee appointed the Committee pursuant to section 1102 of the Bankruptcy Code.
The Debtor is in the oil field service business. It performs services for companies such as Shell both offshore and onshore.
B. Proposed Sale of Certain Assets of the Debtor to Terra.
As this Court is aware, the Debtor has been unable to take any action that will bring about a return to creditors. The UCC was contacted by and has negotiated with Terra a sale that will pay some of the Debtor’s creditors. See, Exhibit B.
By this Motion, the UCC is seeking Court authority to either proceed with a diligence and possible sale process pursuant to terms of the Agreement from Terra or conduct an auction based on the proposed bidding procedures as described herein.
The Debtor is not affiliated with Terra and has no interest in Terra. By way of full disclosure the UCC is aware that some employees of the Debtor will be offered employment with Terra.
Pursuant to the offer, Terra has agreed to enter into a diligence process regarding certain assets of the Debtor. Should Terra, at its discretion, be satisfied with the results of the diligence process, Terra intends to purchase certain assets of the Debtor for $600,000.00 (collectively with any higher bid, the “Sale Proceeds”) in “as is” condition with no warranties. The Agreement excludes the purchase of the Debtor’s cash on hand, Chapter 5 causes of action, and receivables, except as allocated to cure certain obligations of the Debtor as set forth in the Agreement. In summary, the Agreement is for the purchase of certain operating assets of and claims owned by the Debtor (collectively, the “Property”) including
(1) all inventory as set forth on schedules attached to the Agreement,
(2) all equipment as set forth on schedules attached to the Agreement,
(3) all certificated moveables and rolling stock as set forth on schedules attached to the Agreement, and
(4) those leases, master service agreements, contracts and other obligations (the “MSAs”) expressly assumed by Terra in its sole discretion.
The Property excludes the Debtor’s cash on hand and its Chapter 5 causes of action. The proceeds of the sale and the Debtor’s receivables shall be used to pay cure costs associated with the assumed MSAs, contracts and other obligations. All liabilities not expressly assigned or assumed shall remain with the Debtor. The Property shall be sold free and clear of all liens, encumbrances, mortgages, and security interest pursuant to a sale order acceptable to Terra in its sole discretion. Any liens, encumbrances and security interests against the Property shall attach to the Sale Proceeds as provided under the Bankruptcy Code.
Upon completion of the diligence process, Terra, at its discretion, shall purchase the Debtor’s Property pursuant to section 363 of the Bankruptcy Code upon the terms and conditions set forth on the Agreement. The Sale Proceeds shall be payable at a closing within fifteen (15) days of entry of a final non-appealable sale order.
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