White Stallion gets approval of settlement, exclusivity extension

By Sarah Lizee

Olympia, Wash., Dec. 13 – White Stallion Energy, LLC secured court approval of a settlement with its official committee of unsecured creditors and its lenders, according to an order filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The lenders include Riverstone Credit Management, LLC, Riverstone Credit Partners, LP, Summit Partners Credit Fund II, LP, Summit Partners Credit Fund A-2, LP, Summit Partners Credit Fund B-2, LP, Summit Partners Credit Offshore Intermediate Fund, II, LP, Summit Investors Credit II, LLC and Summit Investors Credit (UK), LP.

The company said the settlement resolves the relevant claims and causes of action against and among the settlement parties.

White Stallion said it believes the settlement provides a net benefit to its estates and creditors, and that without the settlement agreement, there would likely be significant costs and expenses incurred by the debtors’ estates, potentially without any upside for the estates, unsecured creditors could face a significantly diminished recovery, if any at all, and the debtors could lose consensual usage of cash collateral needed for the administration of the cases.

“For months, the committee has been negotiating with the lenders in connection with the committee’s challenge rights provided in the final cash collateral order and extended by agreement between the committee and lenders,” the company said.

The parties ultimately reached a resolution that resolves causes of action that the committee may have brought against the lenders and other potential estate claims and causes of action, in exchange for the lenders providing funding for administrative expenses of the Chapter 11 cases and providing for a potentially significant recovery for unsecured creditors.

Under the settlement, the lenders will set aside $1 million in cash of the lenders’ cash collateral to fund a litigation trust established for the benefit of the debtors’ unsecured creditors and the committee.

The lenders agreed to release all claims against the debtors, including any deficiency claim against the debtors’ estate and the litigation trust.

The lenders also agreed to release all liens and security interests they hold on all property remaining in the states and all property set aside for the litigation trust and on all assets that the buyer, Responsible Energy Operations, LLC, has not acquired through the sale, including all remaining liens and security interests under the term loan credit agreement, the asset-based lending credit agreement and financing orders.

The debtors will transfer to the litigation trust, free and clear of any and all liens, security interests and encumbrances, all claims and causes of action of any of the debtors under Chapter 5 of the bankruptcy code, and against any individual or entity, including the debtors’ former directors and officers, unless the committee directs that the debtors retain any of the causes of action.

The lenders also agreed that, if they or an affiliate purchase the debtors’ mining-related assets, they will cause the buyer to pay to the debtors’ estates a transferable royalty up to $5 million, payable on a monthly basis for all coal mined and sold from the debtors’ coal reserves acquired by the buyer.

They also agreed that none of the pre-petition debt will be assumed by the buyer.

The committee agreed not to pursue any challenge against the lenders and to support the sale.

The debtors, lenders and committee mutually agreed to a full release of claims under the cases, the bankruptcy code or any loans and financial accommodations.

Exclusivity extension

The company also secured another 120-day extension of its exclusive periods to file and solicit votes on a Chapter 11 plan, according to a separate order filed Monday.

Specifically, the court extended the plan filing period through March 28 from Nov. 27 and the solicitation period through May 26 from Jan. 26.

White Stallion Energy is a coal mining company based in Evansville, Ind. The company filed bankruptcy on Dec. 2, 2020 under Chapter 11 case number 20-13037.

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