Tekoil withdraws J. Aron forbearance agreement motion

By Caroline Salls

Pittsburgh, Aug. 14 - Tekoil & Gas Corp. has withdrawn its motion to enter into a forbearance agreement with lender agent J. Aron & Co. in connection with a credit facility obtained by majority owned subsidiary Tekoil and Gas Gulf Coast, Inc., according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the forbearance agreement also required Tekoil to sell substantially all of the assets of Gulf Coast.

According to the original motion, J. Aron issued a notice of default on the company's credit agreement on May 29 and a notice of foreclosure on all pledged collateral, including Tekoil's pledged membership interest in Gulf Coast, on May 30.

On Wednesday, J. Aron asked the court to appoint a Chapter 11 trustee to oversee the company's operations amid allegations of fraud and mismanagement.

In its withdrawal notice, Tekoil reserved its right to rework the terms of the motion pending the outcome of other issues pending before the court.

Based in The Woodlands, Texas, Tekoil is an oil and natural gas exploration, development, acquisition and production company that filed for bankruptcy on June 10. The Chapter 11 case number is 08-80270.

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