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Emerge Energy Services U.S. Trustee questions plan release mechanism
By Caroline Salls
Pittsburgh, Oct. 18 – The U.S. Trustee overseeing Emerge Energy Services LP’s Chapter 11 case objected Thursday to the proposed confirmation of the company’s amended plan of reorganization, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.
Acting Region 3 U.S. Trustee Andrew R. Vara said in his objection that Emerge has proposed a plan under which shareholders are to receive no distribution, have no right to vote on the plan and are deemed to reject the plan.
Despite this treatment, Vara said the company is seeking approval to deem all of these public shareholders as having consented to providing third-party releases to non-debtor parties unless they return a form opting out of the releases.
The U.S. Trustee said this is an issue, in part, because the shareholders are receiving nothing under the plan, meaning they would get no consideration for granting the requested releases.
In addition, Vara said he objects to deeming consent from those holders of general unsecured claims who do not return a ballot.
“Like the shareholders, silence from a creditor could simply mean the solicitation package never reached them,” the objection said. “Also like the public shareholders, the general unsecured creditors will receive no distribution under the plan, and therefore no consideration for any release, if the class votes to reject the plan.”
A hearing is scheduled for Oct. 24.
Southlake, Tex.-based Emerge Energy Services is a limited partnership formed in 2012 by management and affiliates of Insight Equity Management Co. LLC to own, operate, acquire and develop a portfolio of energy service assets. The company filed for bankruptcy on July 15 under Chapter 11 case number 19-11563.
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