Luca files bankruptcy to sell assets; SEC files suit, seeks receiver

By Caroline Salls

Pittsburgh, Aug. 7 – Luca International Group LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of Texas.

Chief restructuring officer Loretta Cross said in a statement filed with the court that the company filed bankruptcy to sell its assets and create a source of funds to repay creditors, including claims by litigants, and return any remaining amounts to investors.

Cross said the Securities and Exchange Commission filed suit against the company on July 6, alleging that investors’ funds were not spent appropriately or in accordance with fundraising documents.

The SEC has moved for the appointment of a receiver, along with other restrictive measures, Cross said.

“The company is simply out of cash,” the CRO said in her statement. “The company owes more to trade creditors than it can pay for out of its current operating cash flow.”

In addition, Cross said a number of lawsuits have been filed against Luca, including collection actions, lien assessments and litigation that led to the SEC complaint.

“The company needs the protection of the automatic stay to allow for the time to execute an open sales process that will allow it to address the payment of creditors with the remainder being available to provide a return of investor funds,” Cross said.

The CRO said Luca will need additional capital to provide for the continued operations of its oil fields and to execute an open sale process.

As a result, the company obtained a commitment for $2 million of debtor-in-possession financing, which Cross said will be sufficient to fund Luca during the sales process. Schumann/Steier Holdings, LLC is the DIP lender.

Interest on the DIP loan will be Libor plus 1,500 basis points with a 3% Libor floor.

The facility will mature in nine months.

Luca is seeking interim access to $200,000 of the financing.

According to court documents, Luca has $50 million to $100 million of both assets and debt.

The company is represented by Hoover Slovacek, LLP.

Houston-based Luca International is engaged in the exploration and production of natural gas, petroleum and related hydrocarbons. The Chapter 11 case number is 15-34221.

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