White Star Petroleum Holdings financing motion opposed by U.S. Trustee

By Caroline Salls

Pittsburgh, July 5 – The U.S. Trustee overseeing White Star Petroleum Holdings, LLC’s Chapter 11 case objected Wednesday to approval of the company’s proposed debtor-in-possession financing, according to a filing with the U.S. Bankruptcy Court for the Western District of Oklahoma.

U.S. Trustee Ilene J. Lashinsky said in her objection that, “without schedules, the statement of financial affairs and other critical bankruptcy documents for these debtors, it is difficult to evaluate the appropriateness of the proposed debtor-in-possession financing.”

In addition, Lashinsky said case parties believe that the value of the White Star debtors’ assets may be less than the $332 million total amount of debt, meaning the company’s reorganization “is primarily for the benefit of the secured creditors.”

The U.S. Trustee also said the proposed DIP facility interest rate is “unreasonable.”

Interest is scheduled to accrue on the DIP financing at the higher of the Federal Funds rate plus 50 basis points, the Prime rate plus 900 bps or Eurodollar plus 1,000 bps.

The independent oil and natural gas company is focused on the acquisition, development, operation and production of unconventional oil and natural gas properties in the Mississippi Lime and Woodford Shale plays in Central Northern Oklahoma. Its headquarters are in Oklahoma City.

The company filed bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on May 28, and the case was transferred to Western Oklahoma on June 30. The Chapter 11 case number is 19-12521.

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