UPDATE 12:36 p.m. EDT 9/25/2015: On Friday morning, Judge Christopher Sontchi entered an
order authorizing Samson Resources to use cash collateral on an interim basis.
Original Story 7:03 p.m. EDT 9/18/2015:
Judge Christopher Sontchi approved all of Samson Resources’ requested first day relief at today’s hearing after imposing certain concessions on the secured lenders, including on their adequate protection requests related to the use of cash collateral. The debtors’ motion to use cash collateral was heavily contested by an
ad hoc group of unsecured noteholders holding about 50% of the $2.25 billion issuance who argued that liens on unencumbered assets should not be granted as adequate protection on the first day of the case.
A full recap of today’s live blog coverage is
HERE.
At the conclusion of the parties’ arguments over the interim cash collateral order, and having heard the ad hoc unsecured noteholder group’s objections, Judge Sontchi clearly stated that he would not, at this interim cash collateral stage, permit liens on unencumbered property, secured lenders’ professional fees to be paid, or termination events that did not include a five-day notice period. Despite those admonitions and after a recess, the secured lenders agreed to those concessions but did not concede the lien on unencumbered property point. After reviewing the cash collateral budget and before another recess, Judge Sontchi became incensed at the secured lenders, stating:
“So what I'm really hearing from the secured lenders is I'm going to kill your company if you don't give me liens on unencumbered assets. I really don’t like it when secured lenders say no to me. Is this really the way you want to begin the case?”
Even after a recess, Judge Sontchi instructed the parties to move on to matters other than cash collateral, stating that he was unsure if he had ever been so furious at a party or parties in a case before, calling the secured lenders “pigs” and “hogs.” Judge Sontchi stated again that the secured lenders are threatening to destroy the company and that this was no way to start the secured lenders’ relationship with the court.
After turning to other requested relief, the secured parties consented to not receiving a lien on the unencumbered collateral for purposes of the interim cash collateral order. Counsel for first lien agent JPMorgan said that his client would concede the point on the adequate protection liens for interim relief, and counsel for the second liens similarly agreed to defer the issue.
Judge Sontchi then apologized for a failure to communicate, stating that he was perceiving an argument that to the extent that unencumbered collateral was not encumbered, the hedges would be called. Judge Sontchi said that all of his issues were then resolved and that he would so-order the record and enter a revised interim cash collateral order on Monday.
Joshua Sussberg from Kirkland & Ellis appeared on behalf of Samson. Sean Scott of Mayer Brown appeared on behalf of first lien agent JPMorgan. Margot Schonholtz of Willkie Farr appeared on behalf of the second lien lenders. Chris Shore of White & Case appeared on behalf of the ad hoc group of unsecured noteholders.
Samson’s second day hearing is scheduled for Oct. 14 at 10 a.m. EDT, with objections due by Oct. 7. The unsecured creditor committee formation meeting is scheduled for Sept. 29 at 10 a.m. EDT.