Judge Deems YPF Capable of Funding Maxus’ Bankruptcy Plan

by San Antonio Attorney

Maxus Energy filed for bankruptcy due to the increasing cost of cleaning Passaic River, a contaminated waterway in New Jersey.  However, the company’s fate may be alleviated as a new financial agreement comes into view.

Christopher Sontchi, Bankruptcy judge of the United States Bankruptcy Court in Delaware, indicted a financing package for the company, which cost $63 million.  This was amended after the creditors voiced out their concerns.

Maxus has collaborated with YPF in terms of paying the State of New Jersey $130 million in settling majority of the pollution claims in 2013.  Cleanup fees can have a steep fee of $1 billion to $3.4 billion.

Maxus Energy recently filed for Chapter 11 bankruptcy last June.  This deal aims to have a decent settlement with the parent company, in order to cover up environmental obligations.

YPF acquired Maxus Energy in 1995.  Aside from the oil fields, YPF also received the liabilities of the company, particularly dwindling operations.

The bankruptcy financing of Maxus Energy will continue the cleanup work, as stipulated by terms and agreements.  One of the controversies the company faced was a pending loan that shouldered the professional fees of legal advisers and attorneys.

Another chemical company, Occidental Chemical and Petroleum Corp, otherwise known as OxyChem, has been trying to contact YPF to split the account of cleanup expense.

Christopher Shore, a lawyer of OxyChem, said that the reorganization process of bankruptcy filing poses a threat to Maxus Energy’s stability as a company.

Maxus intends to borrow money in bankruptcy but this amount costs more than it could pay.  Shore added that this is a prevailing factor that can give YPF a ‘veto power’ over creditors.

The unsecured creditors have formed a committee and also expressed their concern about the power of bargaining in the hands of YPF, according to Adam Harris, an attorney for the group.

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