Gavilan Resources sale procedures and cash collateral use approved

By Caroline Salls

Pittsburgh, June 10 – Gavilan Resources, LLC obtained court approval of the bid procedures for the proposed sale of its assets, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The bid procedures allow Gavilan to enter a stalking horse bid agreement to serve as the baseline for the court-supervised auction process.

Bids are due by 6 p.m. ET on July 20. If a stalking horse bid is received, competing bids must at least equal the amount of that bid, plus the amount of a 3% break-up fee and up to $500,000 expense reimbursement to be paid to the stalking horse if it is not ultimately the winning bidder, plus a $100,000 overbid amount.

An auction will be held on July 27, if necessary. Bids at auction must be made in minimum increments of $100,000.

The sale hearing is scheduled for July 31.

Gavilan also received court approval to use the cash collateral of its pre-bankruptcy secured parties.

The company said about $32 million of its cash on hand as of the bankruptcy filing date constitutes cash collateral.

Without access to the cash, Gavilan said it would be unable to satisfy trade payables, implement its sales process and administer its Chapter 11 cases.

Gavilan Resources is a Houston-based private company established in 2017 in partnership with Blackstone to acquire, develop and produce oil and natural gas assets in the Eagle Ford Shale play in South Texas. The company filed bankruptcy on May 15 under Chapter 11 case number 20-32656.

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