Venoco reaches deal with Chevron, asks court to overrule U.S. trustee

New York, May 21 – Venoco, LLC said it has reached an agreement with Chevron U.S.A. Inc. to support its plan of reorganization and asked the U.S. Bankruptcy Court for the District of Delaware to overrule an objection from the U.S. trustee in its bankruptcy case.

If the court approves the stipulation with Chevron, then the company will have “near unanimous support” for its reorganization with the exception of the U.S. trustee’s objection, according to court filings.

Chevron, which has claims of $242 million against each of Venoco and Ellwood Pipeline, Inc. for a total of $484 million, is the largest general unsecured creditor in the case.

If the stipulation is approved by the bankruptcy court, Chevron has agreed to vote in favor of the plan of reorganization, Venoco said.

Without Chevron’s vote, $185.62 million of the general unsecured claims against Venoco have been voted in favor and $1 against while $10.32 million of the general unsecured claims against Ellwood have been voted in favor and $1 against.

As a result, Chevron votes against the plans, confirmation of the Ellwood subplan will be impossible and the Venoco subplan can only be passed by making use of the cramdown provision.

The U.S. trustee has objected to the third-party release in the plan as non-consensual and to the exculpation as not limited to estate fiduciaries and impermissibly applying to prepetition and post-effective date conduct.

In response, Venoco argued that the releases are consensual, that “the unique circumstances” of the case and “significant contributions” of non-estate fiduciaries justify the exculpations, that the prepetition efforts contributed to the creation of the plan of reorganization and that the post-effective date exculpation applies to the liquidating trustee, which is permissible.

The confirmation hearing is scheduled for May 23.

Venoco is a Denver-based energy company. The company filed bankruptcy on April 17, 2017 under Chapter 11 case number 17-10828.

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