Legacy Reserves files Chapter 11 to facilitate financial restructuring

By Wendy Van Sickle

Columbus, Ohio, June 18 – Legacy Reserves Inc. and its subsidiaries began voluntary cases under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, according to a news release issued Tuesday evening.

The cases are pursuant to the terms of the previously announced global restructuring support agreement between the company, its revolving credit facility and second-lien term loan lenders and an ad hoc group of senior noteholders.

The company said it plans to operate in the ordinary course of business during the Chapter 11 cases and has filed a number of customary first day motions to enable its operations to continue as usual.

“Specifically, the company requested authority, among other things, to pay in full on a normal-course basis employee wages and honor existing employee benefit programs, vendors and other operating expenses, joint interest billings for non-operated properties, and royalties to mineral interest owners under terms of applicable agreements,” the release states.

As previously announced, the company has received a commitment for $350 million in debtor-in-possession financing that, subject to court approval, will refinance portions of its existing reserve-based credit facility “and, when combined with cash from operations, will provide ample liquidity to support the company's continuing business operations during the chapter 11 cases,” according to the news release.

Under the global restricting support agreement, creditors constituencies across all classes of the company's capital structure have reached an agreement on the terms of a plan of reorganization.

Under those terms, the company's unsecured notes will be extinguished with substantially impaired class treatment, and all common stock of Legacy will be extinguished with no associated recovery.

The company expects to file the plan within 45 days.

Legacy expects that its common stock will be delisted from the Nasdaq Stock Market LLC for non-compliance with marketplace rules.

Legacy expects there will be no recovery for any equity holder in the Chapter 11 cases.

Perella Weinberg Partners and Tudor Pickering Holt & Co. are acting as financial adviser to the company, Sidley Austin LLP is acting as legal adviser, and Alvarez & Marsal is acting as restructuring adviser.

PJT Partners LP is acting as financial adviser for the second-lien lenders, and Latham & Watkins LLP is acting as legal adviser.

Houlihan Lokey is acting as financial adviser for the ad hoc group of senior noteholders, and Davis Polk & Wardwell LLP is acting as legal adviser.

RPA Advisers, LLC is acting as financial adviser to Wells Fargo Bank, as administrative agent for the revolving lenders, and Orrick Herrington & Sutcliffe LLP is acting as legal adviser.

Legacy Reserves is a Midland, Texas-based company focused on the acquisition and development of oil and natural gas properties.

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