Endeavour trustee alleges super-priority claim not common collateral

By Mark Reccek

Bethlehem, Pa., Sept. 17 – Endeavour International Corp.’s secured-priority notes trustee has sought a judicial determination that the collateral agent’s second priority notes super-priority claim does not constitute common collateral, according to a complaint filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

According to the complaint, Endeavour’s proposed intercreditor settlement agreement unjustifiably attempts to use unencumbered cash of the debtors to pay junior administrative creditors ahead of the super-priority administrative claims of the holders of the 12% second priority notes due June 2018.

Also, the trustee said the settlement asks the court to dismiss the Chapter 11 case without providing for any payment to the holders of the second-priority notes on account of their allowed super-priority administrative expense claim from unencumbered cash.

“Due to the decline in value of the pre-petition notes, collateral since the commencement of the Chapter 11 cases and the inadequacy of the adequate protection package provided, the second-priority notes collateral agent on behalf of the holders holds a substantial super-priority administrative expense claim against certain of the debtors,” the complaint also said.

The intercreditor agreement provides for the subordination of the liens of the second-priority collateral agent to the liens of the first-priority collateral agent. The agreement also requires the turnover of proceeds of the common collateral to the holders of the first-priority notes, until the holders of the first-priority notes are paid in full.

Endeavour is a Houston-based oil and gas exploration and production company focused on the North Sea and the United States. The company filed for bankruptcy on Oct. 10, 2014 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 11 case number 14-12308.

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