New Gulf Resources, LLC Files For Bankruptcy in Delaware

On December 17, 2015, New Gulf Resources, LLC and certain of its affiliates (collectively, “New Gulf” or the “Debtors”) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware in Wilmington. According to the declaration of New Gulf’s Chief Financial Officer, Danni S. Morris (the “Morris Declaration”), New Gulf entered into a restructuring support agreement with creditors holding more than 72% of its second lien notes and 22% of its subordinated PIK notes (the “Ad Hoc Committee”). The Ad Hoc Committee approved and New Gulf underwent a corporate reorganization which among other things changed the approval required to initiate a voluntary bankruptcy filing. The agreement contemplates a plan which will provide varying equity to lenders in the reorganized New Gulf depending on their vote on the plan. See Morris Declaration at 36-49New Gulf’s operations have focused on acquisition, development, exploration and production of oil and natural gas properties, primarily in the East Texas Basin. The Debtors own interests in approximately 77,000 net acres of oil and gas properties. See Morris Declaration at 5.New Gulf’s liabilities total approximately $575 million which includes (i) $38 million owed pursuant to a 2014 Revolving Credit Agreement with MidFirst Bank as Administrative Agent, (ii) $365 million owed on account of senior secured notes with Bank of New York Mellon Trust Company, N.A. as trustee and collateral agent, (iii) $10 million owed to trade creditors in the ordinary course of business including royalty owners, and (iv) $162 million to unsecured holders of Subordinated PIK Notes also with the Bank of New York Mellon Trust as trustee. See Morris Declaration 13-28.The Debtors’ bankruptcy cases are being jointly administered in the bankruptcy case captioned In re New Gulf Resources, LLC, et al., Case No. 15-12566. A copy of the Morris Declaration can be accessed here: Download Morris Declaration.For further information, please contact a Thompson & Knight Bankruptcy and Restructuring Attorney. For more information on the Thompson & Knight’s Bankruptcy and Restructuring Practice, please visit www.tklaw.com/bankruptcy-and-restructuring/.