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Earth Biofuels, petitioning creditors seek case dismissal to negotiate out-of-court restructuring
By Caroline Salls
Pittsburgh, Nov. 15 - Earth Biofuels, Inc. and the group of noteholders who filed the involuntary bankruptcy case against the company asked the U.S. Bankruptcy Court for the District of Delaware to dismiss the case to allow the parties to negotiate a restructuring outside of bankruptcy, according to a Wednesday court filing.
As previously reported, on July 10, Castlerigg Master Investments Ltd., Radcliffe SPC Ltd., Portside Growth and Opportunity Fund, Cornell Capital Partners LP and Evolution Master Fund Ltd. filed the Chapter 7 bankruptcy petition, claiming that the biodiesel-fuel producer has not been paying its debt as it comes due.
Under an interim restructuring agreement, the participating noteholders have agreed to forbear from exercising their rights against the company, and Castlerig has agreed to purchase the claims of Portside, Evolution and three other noteholders.
Also under the interim restructuring, collateral documents are being held in escrow until the court rules on the case dismissal motion. The interim restructuring and escrow agreement are subject to the case being dismissed by Dec. 21.
According to the motion, the interim restructuring gives the parties an avenue to resolve the claims against Earth Biofuels without needing to liquidate the company or incur the expense of case conversion.
In addition, Earth Biofuels and the petitioning creditors said the dismissal will avoid the costs, delay and uncertainty that would arise in litigation.
A hearing is scheduled for Dec. 10.
The involuntary bankruptcy petition was filed on July 10. Earth Biofuels' Chapter 7 case number is 07-10928.
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