American Eagle Energy committee asks court to convert Chapter 11 case

By Caroline Salls

Pittsburgh, April 13 – American Eagle Energy Corp.’s official committee of unsecured creditors asked the U.S. Bankruptcy Court for the District of Colorado to convert the company’s Chapter 11 bankruptcy case to Chapter 7, according to a motion filed April 13.

“What the ad hoc noteholder group is trying to do through the plan – at this late stage of the case after substantially all of the debtors’ assets have been sold and after clear rulings were issued by the court – is transparent and clearly not in the best interest of the estates and their unsecured creditors,” the committee said in the motion.

Specifically, the committee said the company’s noteholders are trying “through their unconfirmable plan” to use the American Eagle estates’ unencumbered assets, including avoidance action recoveries to which the court found unsecured creditors are solely entitled, “to fund the pursuit of the noteholders’ interests.”

“The noteholders’ continued improper, bad faith purposes for the Chapter 11 process and attempts to vitiate the court’s prior cash collateral orders and have unsecured creditors foot the noteholders’ bill provide good cause for conversion,” the committee said.

In addition, the committee said conversion will be a significantly cheaper and more expeditious process than continued administration under Chapter 11, resulting in larger recoveries for unsecured creditors.

“The noteholders’ unnecessarily multi-layered, prohibitively expensive, defective plan, together with the substantial expense of litigating or otherwise fixing all such defects, would deplete such recoveries, likely to zero or close to zero,” the committee said in the motion.

American Eagle is a Littleton, Colo.-based independent oil and gas acquisition, exploration and development company. The company filed for bankruptcy on May 8, 2015 under Chapter 11 case number 15-15073.

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