Dallas Bar Association
HEADNOTES
Focus Bankruptcy and Commercial Law
August 2015 Volume 40 Number 8
Get Ready for a
DBA Dedicates 24th Habitat House
e m i T d o o G ’ n Rocki
at Law Jam 5! Join us for Law Jam 5, Saturday, August 22, 2015.
Doors open at 6:30 p.m. Event starts at 7:00 p.m. The Granada Theater - Lower Greenville Avenue. Tickets at www.dbalawjam.org. $25 in advance/$30 after August 7. Proceeds benefit the Dallas Volunteer Attorney Program.
On June 20, DBA dedicated its 24th Habitat for Humanity home. DBA president-elect Jerry Alexander turned the keys over to the Alford family. DBA Home Project Co-Chairs David Fisk and Ethan Minshull led the dedication, as volunteers celebrated the completion and dedication of the home. To participate in the project for next year, contact Ethan at ethan.minshull@wickphillips.com.
Focus
Bankruptcy & Commercial Law
An Overview of Oil & Gas Bankruptcy Issues by Eric M. Van Horn
When oil and gas companies file bankruptcy, a variety of important issues arise for creditors, often on short notice, and can require immediate attention to the flurry of early pleadings. This article generally focuses on how creditors can preserve and protect their interests and critical deadlines for doing so, including those set by early case orders. Initially, when a bankruptcy is filed, the “automatic stay” under §362 is imposed and, generally speaking, automatically prevents creditors from initiating, or continuing, acts to collect upon their debts from the debtor or its assets constituting “property of the estate” by §541. Certain exceptions, discussed herein, may apply for oil and gas creditors. Royalty owners, as lessors of oil and gas leases, are sometimes the largest type of creditors. Some oil and gas leases provide for automatic termination for unpaid royalties. When conditions precedent for termination are satisfied pre- or post-bankruptcy, the royalty owner, in an abundance of caution, may want to seek relief from the automatic stay, or, at least seek a “comfort order” declaring the lease terminated. To preserve valuable leases, debtors frequently obtain authority to pay royalties to prevent termination. Additionally, royalty owners in Texas are generally protected as automatically perfected secured creditors not requiring relief from the
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automatic stay. Tex. Bus. & Com. Code §9-343. But in complex bankruptcy cases, this protection may not be enough when another state’s laws governing perfection and priority of such liens apply. Creditors in oil and gas cases may have a variety of other mechanisms to protect their claims and interests, but must know the important methods and deadlines for doing so. Creditors who supply goods to debtors within 45 days of bankruptcy have an ability to reclaim them, but must demand reclamation in writing by the 20th day after the bankruptcy filing. §546(c). Moreover, creditors who supplied goods within 20 days before a bankruptcy case may also file applications for administrative expense claims (generally the highest priority unsecured claims) for the value of such goods. §503(b)(9). Creditors must be careful to monitor all pleadings filed and served upon them because deadlines are frequently established early in a case to file such claims. Oil and gas creditors may also have contractual (e.g., arising under joint operating agreements) or statutory lien rights that need perfected post-bankruptcy. See e.g., Tex Prop. Code Ann. §§ 53.001-53.260; 56.001-56.045. Exceptions to the automatic stay and the trustee/debtor’s lien avoidance powers exist to allow such perfection. §§362(b)(3), 546(b). Notices of perfection are filed in the bankruptcy case, and perfection is done under applicable non-bankruptcy law. A continued on Page 14
Inside
5 Bill Mateja and Victor Vital Named Co-Chairs of Campaign 9 The Automatic Stay: The Good, the Bad, and the Ugly
11 Is That #Hashtag Property of the @Estate? 17 Six Reasons to Consult a Bankruptcy Attorney
The 2015 DBA Membership Directory is now available in print & online. Check out the directory and legal resource guide used by Dallas attorneys! To view the Online Directory and Legal Resource & Expert Witness Guide, go to www.dallasbar.org/pictorial and login. To request a copy of the new directory, contact pictorial@dallasbar.org.