Houston, Texas-based Sabine Oil and Gas Corp. has won approval of a Manhattan judge for its financial reorganization, clearing the way for the producer to come out of Chapter 11.
The independent company filed more than a year ago and had been fighting creditors ever since. But U.S. Bankruptcy Judge Shelley chapman recently held a status conference and approved the plan.
The reorganization cut Sabine’s debt from $2.8 billion down to $350 million, which left its lenders with almost all of the company’s stock. Unsecured creditors will get only a small amount of company stock and warrants, or as they say, “pennies on the dollar” on the $1.4 billion they were owed.
But some of the lenders indicated they will challenge the fees paid to lawyers and advisers for the creditors committee. Much of the opposition led by some of the creditors focused on the question of the value of the lenders’ collateral. The creditors committee had earlier said Sabine would have been better off litigating against its lenders rather than settling.
Sabine’s had a history of focusing its oil and natural gas exploration in the Granite Wash formation in western Oklahoma and the Texas Panhandle as well as the Cotton Valley Sand and Haynesville Shale formations in east Texas and the Eagle Ford Shale in south Texas.