Emerald Oil liquidation plan draws objection; creditors vote to accept

By Caroline Salls

Pittsburgh, March 17 – Emerald Oil, Inc.’s joint plan of liquidation drew an objection from acting Region 3 U.S. Trustee Andrew R. Vara “because it treats individual claimants in the same class differently, penalizing individual parties in interest that vote against the plan or fail to vote at all,” according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Vara said these groups of claimants would receive nothing under the proposed plan, although anyone in the class voting to accept the plan would share in a distribution.

The U.S. Trustee said this is a “clear violation of § 1123(a)(4), rendering the plan unconfirmable.”

In addition, Vara said the plan provides that the same claimants who are slated to receive no distribution are forced to extend broad releases, which are nonconsensual and are being given in exchange for nothing in return.

According to a separate filing, Emerald Oil’s plan was accepted by a majority of voting creditors, including all four holders of $27.68 million in credit facility claims and 99.78% in amount and 86.84% in number of holders of general unsecured claims against the Emerald Oil debtor.

The plan confirmation hearing is scheduled for March 22.

Based in Denver, Emerald Oil is an oil exploration and production company that filed for bankruptcy on March 22, 2016 under Chapter 11 case number 16-10704.

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