Lilis Energy Inc. has voluntarily filed under Chapter 11 of the US Bankruptcy Code in the US bankruptcy court for the Southern District of Texas, Houston Division.
The petitions were filed in accordance with a restructuring support agreement entered into among the company and certain of its subsidiaries, certain investment funds and entities affiliated with Varde Partners Inc. (Varde Funds), which collectively own all of the company’s outstanding preferred stock, a subordinated portion of the indebtedness outstanding under the company’s second amended and restated senior secured revolving credit agreement, a portion of the company’s common stock, and all other lenders under the credit agreement.
If consummated, the plan is expected to reduce Lilis Energy’s funded debt obligations by more than $34.9 million.
The plan contemplated by the RSA provides that shares of the company’s common stock will be canceled for no consideration. The Company believes it is unlikely that the holders of shares of its common stock will receive any consideration for their shares under any plan approved by the court.
The plan is contingent upon Varde Funds’ election to provide, on or before Aug. 17, an agreed equity commitment and provision of additional debtor-in-possession (DIP) financing. If Varde Funds elect not to provide DIP financing and to make the equity investment in the company or the plan contemplated in the RSA is not otherwise pursued, the RSA provides that the company will pursue an agreed sales process with respect to its assets.
With the filing, and subject to court approval, Lilis has received a commitment from its bank lenders under its credit agreement to provide up to $15 million in DIP financing. The company expects to continue to operate in the ordinary course throughout the restructuring process without material disruption to vendors, suppliers and partners.
