From The Wall Street Journal
Hilltop Energy LLC, a money-losing Texas oil and gas drilling company, filed for bankruptcy Thursday with a “prepackaged” plan that hands ownership to Dallas-based Rivershore Operating LLC and bondholder J.P. Morgan Securities LLC.
Hilltop, whose roots go back to failed oil company Cubic Energy Inc., filed for chapter 11 after years of red ink left the company unable to cover its expenses, according to papers filed in U.S Bankruptcy Court in Wilmington, Del.
The company has been servicing most of its debt by paying interest in the form of issuing additional notes, but given the anticipated decline in revenue, the company wouldn’t likely be able to pay off its debt set to mature in 2021, said manager Claude A. Pupkinin court filings.
Hilltop has no employees, and its oil and gas properties are managed and operated by Rivershore, an affiliate of Dallas-based energy company Rivershore Resources.
Hilltop’s predecessor company Cubic Energy filed for bankruptcy in 2015. Cubic emerged from bankruptcy in 2016 under the control of a group of bondholders led by funds managed by Anchorage Capital Group LLC.
Under the company’s proposed chapter 11 plan, Hilltop will convert its secured debt to equity. Rivershore will receive a 55% stake and J.P. Morgan will take the remaining equity in the reorganized company. Equity in the existing Hilltop will be wiped out.
The company has already solicited and garnered yes votes from all its impaired creditors, Mr. Pupkin said.
Chase Lincoln First Commercial Corp. has agreed to provide the new Hilltop with exit financing to fund the business upon its exit from chapter 11.
The company has hired law firm Cole Schotz and financial adviser Dundon Advisers to shepherd it through bankruptcy. Judge Christopher S. Sontchi has been assigned the case, number 19-11122. An initial hearing is slated for Friday afternoon in Wilmington.
