Bankruptcy Judge Confirms Exit Plan of Venoco

by San Antonio Attorney

Delaware Bankruptcy Judge Kevin Gross confirmed the Chapter 11 plan of Venoco Inc., an American oil production company, clearing the way for the company to emerge from bankruptcy.  The bankruptcy plan will cut down almost $1 billion in its liabilities.

One of the reasons why Venoco was able to get the judge’s approval easily was the pre-arranged settlement deal concerning possible legal claims by a key bondholder and a quick resolution of the oppositions to the reorganization from a couple of other bondholders.

As a result of the slump in the prices of oil and gas, Venoco filed for Chapter 11 bankruptcy in March when it secured an approval for its reorganization plan from secured bondholders MAST Capital Management and Apollo Capital Management.  Both of them absolved around $339 million in debt to acquire the majority of the equity in the reformed Venoco.  Representatives of Apollo are also set to gain three of Venoco’s four seats in the board of directors when it is done with bankruptcy, according to the company’s lawyers.

One of its unsecured bondholders had earlier threatened to file a lawsuit in connection to the 2015 deal that permitted MAST and Apollo to swap their unsecured bonds with secured bonds, increasing their chances of getting ahead in the priority lane for repayments.

But the unsecured creditor did not file claims and even supported the reorganization plan soon after the bankruptcy petition was filed.

As part of the restructuring plan, the senior unsecured bondholders of will divide up $6.5 million in cash, more than 2% of new equity and a portion of interest in the gas and oil dig up from the upcoming expansion of operations in the Santa Barbara County, California.

Venoco was founded in 1992 as an exploration business for oil in locations onshore and offshore in southern California.

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