Midstream services provider says it has liens on assets being sold
Judge says more evidence is needed
Mediation to come
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(Reuters) - Nine Point Energy Holdings’ proposed sale to its lenders has been delayed after a judge said she needs more information about the company’s dispute over contracts and liens with a former business partner.
The Denver-based oil and gas company, which filed for bankruptcy in March, was slated to seek approval of its proposed $250 million sale to lenders during a virtual hearing on Thursday. But the sale can’t go forward until a bankruptcy judge determines whether midstream services provider Caliber Midstream Partners LP holds liens on certain assets that Nine Point is trying to sell.
Nine Point, represented by Latham & Watkins, filed for bankruptcy with around $273 million in debt. The company blamed its financial strain on the impact of the COVID-19 pandemic and the Russia-OPEC oil price war.
The company’s exploration and production activities are focused in North Dakota and Montana. It cancelled its midstream services agreement with Caliber shortly before filing for bankruptcy. Caliber, which has asserted around $157 million in claims against Nine Point, says a renegotiated contract with Nine Point is still possible.
Caliber says it is not trying to block a sale of Nine Point’s assets, but that a sale can’t happen unless its purported lien rights are preserved.
U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, said during Thursday’s hearing that she needs evidence as to whether the services Caliber provided Nine Point under a series of contracts fall under the definition of “lien” under North Dakota law. She rejected Nine Point’s argument that she could decide the matter simply by looking at the contracts.
Meanwhile, Nine Point and Caliber have agreed to seek out a mediator. But a lawyer for Caliber, Philip Bentley of Kramer Levin, said during Thursday’s hearing that the two companies are “very far apart.”
Walrath will hear evidence on the dispute on June 24.
Nine Point is the reorganized company that emerged out of Triangle Petroleum Corp’s 2016 bankruptcy.
The case is In re Nine Point Energy Holdings, Inc., U.S. Bankruptcy Court, District of Delaware, No. 21-10570.
For Nine Point: Caroline Reckler of Latham & Watkins and Michael Nestor of Young Conaway and Heather Lennox of Jones Day as special counsel
For Caliber: Philip Bentley of Kramer Levin, Alfredo Perez of Weil Gotshal & Manges, Curtis Miller of Morris Nichols Arsht & Tunnell and Kevin Barrett of Bailey & Glasser
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