Vanguard Natural Resources plan confirmed; committee claims settled

By Caroline Salls

Pittsburgh, July 9 – Vanguard Natural Resources, Inc. reached a settlement with the official committee of unsecured creditors appointed in its Chapter 11 cases that modifies the proposed treatment of general unsecured creditors under the company’s plan of reorganization, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The company’s plan was confirmed in an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Vanguard said the settlement resolves claims and causes of action filed by the committee.

The plan was amended to provide a recovery to holders of general unsecured claims of cash equal to 2% of the holder’s allowed general unsecured claim, capped at a total of $600,000, and a share of post-confirmation trust assets, including $400,000 in cash, the right to object to or otherwise contest specified claims and 50% of the proceeds of any claims or causes of action that vest in the reorganized debtors, other than claims which are released under the plan and claims against entities that received payments in accordance with a court order.

As previously reported, holders of debtor-in-possession facility claims will receive a share of participation in a post-effective date first-lien reserve-based revolving credit facility with an initial borrowing base of $65 million and a $65 million term loan facility.

The revolver will be reduced on a dollar-for-dollar basis equal to 75% of the net cash proceeds of any assets of the reorganized debtors before the effective date.

Holders of revolver claims and secured swap claims will receive their share of a new term loan in the amount of $350 million, less the total amount of the exit term loan A facility, as well as at least 86.1% of new series A convertible preferred stock to be issued by the reorganized company and 75% or 89% of new common stock, depending on whether class five votes to accept or reject the plan.

Holders of term loan claims will receive a share of 10% of the new common stock, as well as the option of either a share of the new preferred class A equity or of the new series of class B convertible preferred stock.

Holders of senior notes claims will receive a share of the new common stock, with the percentage depending on whether the class voted to accept or reject the plan.

Existing equity interests will be cancelled, and holders will receive no distribution.

In addition, Vanguard said in the 8-K that its plan support agreement with holders of revolver claims and secured swap claims was amended to reflect the additional support of the holders of the company’s 9% senior secured second-lien notes due 2024 for the revised plan.

The parties to the amended plan support agreement also support the proposed committee settlement, the 8-K said.

Vanguard is a Houston-based oil and gas exploration and development company. The company filed bankruptcy on March 31 under Chapter 11 case number 19-31786.

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