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| vol 14, num 2 | May, 2017 |
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| A Note from Your Newsletter Editor |
This issue of the ABI Bankruptcy Litigation Committee Newsletter spotlights bankruptcy litigation issues in energy sector restructurings. The newsletter features an article exploring assumption and rejection of oil and gas conveyances, and an article discussing CERCLA liabilities in energy-related cases. The follow up call with the authors to discuss their articles in this newsletter will be held Thursday, May 25th at 1 pm ET. Please use dial in (712) 451-0200; and PIN 114758.
We hope this issue will be helpful to your practice and you can join us for the call. |
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| Don’t Assume It’s a Lease! Applying § 365 to Oil and Gas Conveyances |
The rise in energy-sector bankruptcies has brought the question of whether oil and gas conveyances can be assumed or rejected under § 365 of the Bankruptcy Code to the surface. Issues related to assumption and rejection are particularly difficult in the energy sector because “[t]raditional property concepts are difficult to apply in the oil and gas context. Can one be said to ‘own’ something that is not necessarily quantifiable and to which one’s neighbor can gain legal title by ‘capture’?”
The Sabine Oil & Gas case, decided early last year, allowed an exploration company to reject so-called midstream pipeline contracts. The case received a good deal of attention because it provided a new incentive for exploration and production companies to file for bankruptcy: They may now be able to reject unfavorable pipeline contracts, which the Sabine judge believed did not run with the land under Texas law. But Sabine is only one of many decisions regarding the treatment of oil and gas-related agreements in bankruptcy. |
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| Settling CERCLA Liabilities in Energy-Related Bankruptcy Cases |
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In the recent spate of energy-related bankruptcy cases, restructuring efforts have focused on the underlying business economics — debt-for-equity swaps, rejection of gathering agreements, lease and contract rejections to improve operational efficiencies, and similar efforts. To date, however, many of the cases largely have ignored environmental issues and claims. In the energy sector in particular, these environmental-related liabilities are often massive (sometimes totaling billions of dollars) and usually involve numerous governmental parties, including state and federal regulatory agencies. Environmental liabilities thus present significant challenges for bankruptcy attorneys and their clients.
Indeed, most bankruptcy lawyers are unfamiliar with the applicable regulatory regimes and the enforcement agencies. An energy debtor, for example, may have “decommissioning” obligations under federal and state laws and regulations but also may have cleanup liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which is enforced by the Environmental Protection Agency (EPA). Accordingly, it is not uncommon for a debtor to enter into settlement negotiations with all applicable regulatory agencies and ultimately reach a comprehensive settlement during its pending bankruptcy case.
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At this year's Annual Spring Meeting, Paul Hage, immediate Co-chair of the Unsecured Trade Creditors Committee, was given the "Committee Leader of the Year" award for his continued efforts with the committee. With the help of his leadership team, Paul led the UTC to a successful year that included publishing 5 newsletters and a “Representing the Creditors' Committee: A Guide for Practitioners”, opening the first committee LinkedIn group, and hosting bi-monthly committee calls and two webinars. Paul will now join the Technology & Intellectual Property Committee as Education Director. Congratulations, Paul!
The Commercial Fraud Committee was recognized as "Committee of the Year" for all the work that was completed in 2016. During 2016, the Commercial Fraud Committee was able to publish a total of 8 newsletters, co-host a networking reception at the Winter Leadership Conference, host two
webinars, and hold several committee calls on a variety of topics.
In the photo above at left, Rick Rein (Education Director, Commercial Fraud) and Paul Hage (right - Co-chair, UTC) receive their leadership awards from Scott Williams (center), ABI's immediate Vice President of Membership. |
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| Long Claw of the Law: The Limits of Clawback Actions |
The Bankruptcy Litigation and Young and New Members Committees recently held a session at this year's Annual Spring Meeting titled "Long Claw of the Law: The Limits of Clawback Actions." This session focused on the limits of avoidance actions by bankruptcy trustees in Ponzi scheme cases, including arguments about the expansion of the look-back period to 10 years, trustee standing, clawbacks from noninvestor sources, in pari delicto and how trustees decide whom to sue.
Speakers for this panel included:
- Melissa Davis - KapilaMukamal, LLP; Fort Lauderdale, Fla.
- Richard K. Milin - DiConza Traurig Kadish, LLP; New York
- Peter D. Russin - Meland Russin & Budwick, PA; Miami
- Robert G. Wing - Ray Quinney & Nebeker P.C.; Salt Lake City
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ABI is looking for innovators, disruptors and risk-takers who are creating change in our industry. Candidates will be distinguished by professional achievements and service, and will be selected by a group of experienced professionals from ABI’s leadership. The person does not have to be an ABI member to apply or to be nominated. Submissions are due July 31.
Help us find the future leaders of our industry - nominate a rising star! |
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