Emerge Energy committee withdraws objection to exclusivity extension

By Caroline Salls

Pittsburgh, Dec. 13 – Emerge Energy Services LP’s official committee of unsecured creditors withdrew its objection to the company’s proposed exclusivity extension, according to a notice filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the committee said Emerge Energy’s extension request was based on its progress in its Chapter 11 cases, including negotiations and regular communication with credit constituencies.

“These statements must be holdovers from other standard exclusivity extension motions from typical cases (where debtors and creditor constituencies do negotiate) because they certainly could not have been meant to describe these Chapter 11 cases,” the objection said.

Since it filed for bankruptcy, the creditor group said Emerge Energy has not held plan negotiations with the committee, “a constituency that represents potentially over $570 million in unsecured claims against the debtors.”

Instead, the committee said it has attempted to negotiate with the company and other constituencies, but its “proposals have been met with deafening silence.”

The court denied confirmation of Emerge Energy’s plan in a Dec. 5 order, saying the company needs to revise the plan’s third-party release provisions.

On Dec. 9, the committee objected to the plan.

“The debtors are pursuing a plan that is premised on a deeply flawed, outcome-driven valuation analysis that was prepared after entry into the RSA and, remarkably, after publishing a disclosure statement fixing the debtors’ position to such value,” the creditor group said in its plan objection.

“The plan is a blatant attempt by a lender-in-possession, through its hand-picked ‘special restructuring committee’ of the debtors’ board, to effect an inequitable transfer to itself of all of the value of the debtors’ material encumbered assets through what is effectively a private sale.”

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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