Company plans to drop county bankruptcy over $ 20 million | New

BUFFALO – As a creditor called for greater scrutiny and the judge set tight deadlines, attorney for US coalbed methane company Realm Powder River wrote in a case before the U.S. District Bankruptcy Court. Wyoming, that it would be better to cancel the bankruptcy of the company, now 15 months in total.

US Realm owes Johnson County more than $ 20 million in unpaid natural gas production taxes through its operator Carbon Creek Energy, owes the federal government more than $ 8 million in overdue royalties and fails to meet not area use agreements with dozens of local landowners.

In a February 15 filing, Bradley T. Hunsicker, an attorney for the United States Kingdom, wrote that the company had filed for bankruptcy to protect itself in a specific situation and the protection was no longer needed. Moreover, he added, continuing the proceedings would be unnecessarily expensive. In the past 15 months, he wrote, US Realm has paid over $ 1 million in US legal and fiduciary fees.

It is not known how much money Johnson County will ever get from the American Kingdom, whether or not it remains bankrupt.

The American kingdom received court clearance to pay its taxes, although it never did, but it also did not pay them until it went bankrupt – the company’s overdue tax bills. with the county date back to 2016.

County Commissioner Bill Novotny and Deputy County Attorney Barry Crago have successfully led state-level legislative initiatives over the past few years aimed at alleviating future local unpaid mining taxes and putting Wyoming counties in a higher priority position to collect debts in future bankruptcies. The measures cannot, however, help the county recover the debt the United States Kingdom has already accumulated.

A status conference in January examined the company’s debt to federal and state governments. United States Bankruptcy Court Judge Cathleen D. Parker gave US Realm, which had not paid royalties for over a year, two weeks to file a status report on Debt Debt. royalties, some of which the company challenged. Possible remedies discussed at this conference included dismissing the case, converting it into a Chapter 7 liquidation, or appointing a Bankruptcy attorney in Milwaukee trustee who would exercise day-to-day oversight over US Realm management decisions as needed. .

This report was due on January 27, but the American kingdom missed the deadline. On February 10, Parker filed an order that gave the company seven days to file the report before facing contempt of court or dismissal of the case.

On February 12, attorneys for Pegasus Optimization Services, a company that provides natural gas compression and exploitation services for the United States of America and has a claim of $ 7.85 million in the case, requested that a trustee be appointed due to a lack of transparency.

In general, bankruptcy should provide creditors with transparency, as debtors are required to disclose financial statements. In the case of US Realm, however, lawyers for Pegasus noted that more than half of the money the company pays each month goes to Carbon Creek, a subsidiary and operator of US Realm.

Carbon Creek is not bankrupt, so there is no need to disclose what will happen to that money next. Pegasus’ filing detailed multiple possible conflicts of interest and questionable payments between US Realm and Carbon Creek that Pegasus believed could benefit from trustee oversight.

Throughout the bankruptcy, the financial statements showed that the American kingdom was operating at a loss.

According to statements made at a meeting of creditors, lawyers for Pegasus wrote, Craig Camozzi and Kevin Norris are the COO and CFO, respectively, for US Realm and Carbon Creek, as well as for Powder River Midstream, another affiliate.

They are paid via Carbon Creek, according to the record, so their compensation is beyond the control of the bankruptcy court.

Camozzi, the document noted, was also involved in a personal bankruptcy case in the summer of 2020 and also failed to properly file the required financial disclosures in that case.

According to court records, in the three days leading up to bankruptcy in October 2019, US Realm made payments to Carbon Creek of at least $ 5 million, leaving US Realm with less than $ 1,500 in its checking account at the time. where he filed for bankruptcy. .

The lack of oversight comes “to the detriment of creditors,” Pegasus lawyers wrote. “If the case is dismissed, no party will be available to investigate the transactions between the debtor and its affiliates.”

Without a trustee, conflicts of interest, they wrote, make reorganization “a virtual impossibility”.

In its own February 15 filing, the United States Kingdom requested that the case be dismissed completely. Hunsicker wrote that the expense was not worth the protection and that creditors would be better prepared to protect their interests outside of bankruptcy.

US Realm initially filed for bankruptcy, he wrote, because the Fort Union Gas Gathering Co. threatened to block US Realm’s access to its pipeline because US Realm had not paid its bills.

The bankruptcy offered the company protection against such retaliation, and by spring 2020 the two companies had a new payment agreement.

“At the time, it was four degrees in Wyoming – CBM wells produce fresh water with methane,” Hunsicker wrote. “The threat of closure would have resulted in the debtor’s gas and water infrastructure freezing, destroying the only source of and creating millions of dollars in physical damage that the debtor would not be able to meet. ”

It would also negatively impact the state of Wyoming due to the well abandonment, Hunsicker wrote, and resulted in the layoff of 180 employees and ensured that Wyoming counties would never receive the value of future sales of natural gas.

The issues of Pegasus’ request to appoint a trustee and US Realm’s request to dismiss the case will be the subject of a hearing scheduled for March 16.

About Marc Womack

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