Wed 09/30/2020 15:02 PM
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Relevant Documents:
Agenda
Confirmation Scheduling Order

Judge Marvin Isgur at a hearing this afternoon granted most of the first day relief sought by the Oasis Petroleum debtors on a consensual basis, including interim approval of the debtors’ $450 million revolving DIP facility from prepetition RBL lenders, conditional approval of the debtors’ disclosure statement and approval of the proposed confirmation timeline. A combined final disclosure statement approval and confirmation hearing is scheduled for Nov. 10 at 4:30 p.m. ET. Continue reading for the Amerias Core Credit team's reporting on the Oasis Petroleum first day hearing, and request a trial to access our reporting on thousands of other chapter 11 hearings.  

However, the judge took issue with the emergency relief sought by the debtors relating to nondebtor Oasis Midstream Partners, or OMP, which is 67.5% owned by the debtors. “A number of the motions provide substantive benefits to a nondebtor affiliate, and I am concerned that the debtor isn’t receiving adequate protection,” the judge told debtors’ counsel at the beginning of the hearing. “There is a huge amount of prepetition debt being paid to a nondebtor affiliate on an emergency basis today without any assurance the money is coming back.”

Judge Isgur specifically balked at approving the debtors’ payment of more than $60 million in prepetition amounts due to OMP on “overnight” notice. Although the debtors contend that the proposed payments to OMP are critical to avoid operational disruption, Judge Isgur said that he doubts OMP, as an “insider,” would cease providing services to the debtors if the requested payments are not made immediately. “I don’t know why you need a midstream provider more than they need you,” the judge remarked.

Debtors’ counsel also suggested that all stakeholders have agreed to the payments via the restructuring support agreement, but Judge Isgur pointed out that only 52% of bondholders have joined the RSA as of today, and, therefore, the debtors currently have a “nonconsenting impaired class” entitled to notice and due process.

AnnElyse Gains of Kirkland & Ellis, counsel for the debtors, told the judge that the key date for payment of the OMP claims is Oct. 20, when an intercompany balance reconciliation must be submitted, and noted that the debtors expect more bondholders to join the RSA now that the deal is public. Judge Isgur agreed to hold a continued hearing on the OMP payments on Oct. 15 at 10 a.m. ET in order to beat the Oct. 20 deadline.

Judge Isgur also declined to approve the debtors’ cash management order to the extent it incorporates payments to OMP accounts and would not approve the debtors’ payment of insurance premiums on behalf of OMP, as that would constitute a loan to a nondebtor insider. The debtors agreed to an interim cash management order applicable solely to intercompany payments among debtors.
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