Nine Point Bankruptcy Judge Asks for More Information on Conflict of Privilege

  • Midstream service provider claims to have privileges over assets sold
  • Judge says more evidence is needed
  • Mediation to come

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(Reuters) – Nine Point Energy Holdings’ proposed sale to its lenders was delayed after a judge said she needed more information on the company’s dispute over contracts and privileges with a former commercial partner.

The Denver-based oil and gas company, which filed for bankruptcy in March, was due to seek approval of its proposed $ 250 million sale to lenders in a virtual hearing Thursday. But the sale cannot take place until a bankruptcy judge determines whether intermediary service provider Caliber Midstream Partners LP holds liens on certain assets that Nine Point is attempting to sell.

Nine Point, represented by Latham & Watkins, filed for bankruptcy with approximately $ 273 million in debt. The company blamed its financial pressure on the impact of the COVID-19 pandemic and the Russia-OPEC oil price war.

The company’s exploration and production activities are concentrated in North Dakota and Montana. It canceled its intermediary services agreement with Caliber shortly before filing for bankruptcy. Caliber, which has claimed around $ 157 million in claims against Nine Point, says a renegotiated contract with Nine Point is still possible.

Caliber says he is not trying to block a sale of the assets of Nine Point, but that a sale can only take place if his alleged lien rights are preserved.

U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, said in Thursday’s hearing she needed evidence on whether the services Caliber provided to Nine Point under a series of contracts fell within the scope of the definition of “lien” under North Dakota law. She rejected Nine Point’s argument that she could decide the issue simply by looking at the contracts.

Meanwhile, Nine Point and Caliber have agreed to seek a mediator. But a lawyer for Caliber, Philip Bentley of Kramer Levin, said in Thursday’s hearing that the two companies are “very distant from each other.”

Walrath will hear testimony on the dispute on June 24.

Nine Point is the reorganized company that emerged the bankruptcy of Triangle Petroleum Corp in 2016.

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 advisor

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

Read more:

Triangle Petroleum Corp Says TUSA, Its Units Have Filed In Bankruptcy Court A Third Amended Chapter 11 Joint Reorganization Plan

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