Buccaneer unsecured committee objects to sale and cash collateral use

By Kali Hays

New York, July 29 – Buccaneer Resources, Inc.’s official committee of unsecured creditors objected to the company’s proposed sale of substantially all of its assets and continued use of the cash collateral of its pre-bankruptcy lender, according to separate July 28 filings with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, AIX Energy, LLC is the stalking horse bidder with a credit bid of $58.48 million.

An auction for the assets is set for Aug 18 and the company expects the sale to close by Aug. 29.

The committee’s main issue with the proposed sale lies in its claim that “AIX is a mere shell company” that functions as an instrument of Meridian Capital International Fund, which was Buccaneer’s largest shareholder and pre-petition secured creditor “until one month before these cases were filed,” according to the objection.

“Meridian transferred the secured indebtedness to the newly formed AIX, and AIX now holds the loans for Meridian’s benefit as a vehicle for attempting to acquire the debtors’ assets by credit bid.”

The committee said the proposed sale and “bidding scheme” should be denied as the credit bid violates the directives of the Australian Securities Exchange, AIX as the stalking horse for a bulk sale chills bidding, Meridian’s pre-bankruptcy actions harmed the estate and creditors by forcing Buccaneer to accrue unsecured debt exceeding $15 million and finally, because “the procedures strip creditors of value.”

Regarding Buccaneer’s further use of cash collateral, the committee said it is “overreaching and unnecessary,” fails to include a carve-out for payment of professional fees, restricts the company’s ability to surcharge collateral and affords AIX inaccurate protections.

According to the objection, AIX does not have valid, perfected pre-bankruptcy liens or security interests in all of Buccaneer’s assets and, therefore, is not entitled to protections in the proposed final cash collateral order.

A hearing to approve the bid procedures is set for Aug. 1.

Buccaneer, a Houston-based oil and natural gas exploration and production company, filed for bankruptcy on May 30. It is a subsidiary of Buccaneer Energy Ltd., a Sydney, Australia, company focused on developing oil and gas assets in Alaska. The Chapter 11 case number is 14-60041.

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