CHISHOLM OIL: Unsecureds to Recover 0.0% or 0.5% in Joint Plan

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Chisholm Oil and Gas Operating, LLC, and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of Delaware a Joint Chapter 11 Plan of Reorganization and a Disclosure Statement on June 30, 2020.

The Debtors are commencing the solicitation to implement a comprehensive financial restructuring to deleverage the Debtors’ balance sheet to ensure the Debtors’ long-term viability. As a result of extensive negotiations, on June 15, 2020, the Debtors executed a restructuring support agreement, with (i) lenders that hold approximately 99.6% of the claims under the RBL Credit Agreement and (ii) prepetition equity holders, which own, directly or indirectly, 100% of the outstanding equity interests in the Debtors.

The Restructuring Transaction will allow the Debtors to emerge from the Chapter 11 Cases substantially de-levered and funded with additional capital to ensure the reorganized Debtors have sufficient go-forward liquidity. The Debtors’ balance sheet liabilities will be reduced from approximately $517 million in funded debt to approximately $34.77 million in funded debt, which represents an approximate 93% reduction of debt on the Effective Date relative to the Petition Date.

The Restructuring Transaction will restructure Chisholm’s balance sheet by (i) refinancing a portion of the claims under the RBL Credit Agreement with new debt in the form of a first-lien second-out exit facility, (ii) equitizing the remaining RBL Claims, (iii) either equitizing or cancelling the claims under the Term Loan Agreement, and (iv) cancelling existing equity interests. Notwithstanding the fact that substantially all of the Debtors’ assets are encumbered by liens to secure the RBL Claims and Term Loan Claims, and the value of the Debtors’ assets do not exceed the amount of he RBL Claims, in an effort to streamline these cases and achieve a consensual confirmation process, the Restructuring Transaction offers distribution to the holders of Allowed Term Loan Claims, holders of Allowed General Unsecured Claims, and the Consenting Sponsors in the form of equity, warrants, and releases if these parties vote in favor of the Plan.

Class 4: Unsecured Claims will recover approximately 0.0% or 0.5%. If (A) Class 4 and Class 7 vote to accept the Plan and (B) as of the Confirmation Date, the Consenting Sponsors have not terminated their obligations under the Restructuring Support Agreement, then on or as soon as reasonably practicable after the later of the Effective Date and the date on which a General Unsecured Claim becomes an Allowed General Unsecured Claim, each holder of an Allowed General Unsecured Claim shall receive, in full and final satisfaction of such Claim, such holder’s Pro Rata share of:

* 3% of the New Equity Interests, subject to dilution by the Warrant Equity and the MIP Equity; and

* Warrants for up to 6% of the New Equity Interests, subject to dilution by the MIP Equity.

If (A) Class 4 or Class 7 do not vote to accept the Plan or (B) prior to the Confirmation Date, the Consenting Sponsors terminate their obligations under the Restructuring Support Agreement, then no holder of a General Unsecured Claim shall receive any distribution on account of such General Unsecured Claim.

The Reorganized Debtors shall fund Cash Plan Distributions with (i) Cash available on or after the Effective Date and (ii) Cash proceeds from the FLFO RBL Facility, to the extent applicable.

A full-text copy of the Disclosure Statement dated June 30, 2020, is available at from PacerMonitor at no charge.

Proposed Attorneys for the Debtors:

Matthew S. Barr
Kelly DiBlasi
Lauren Tauro
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007

– and –

M. Blake Cleary
Jaime Luton Chapman
S. Alexander Faris
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253

About Chisholm Oil and Gas

Chisholm is an exploration and production company focused on acquiring, developing, and producing oil and natural gas assets in the Anarkado Basin in Oklahoma in an area commonly referred to as the Sooner Trend Anadarko Basin Canadian and Kingfisher County (the “STACK”).

Chisholm Oil and Gas Operating, LLC, based in Tulsa, Oklahoma, and its affiliates sought Chapter 11 protection (Bankr. Lead Case No. 20-11593) on June 17, 2020.

In the petition signed by CFO Michael Rigg, the Debtors were estimated to have $1 billion to $10 billion in assets and $500 million to $1 billion in liabilities.

The Hon. Brendan Linehan Shannon presides over the case.

The Debtors tapped WEIL, GOTSHAL & MANGES LLP, and YOUNG CONAWAY STARGATT & TAYLOR, LLP, as counsel; EVERCORE GROUP LLC, as investment banker; ALVAREZ & MARSAL NORTH AMERICA, LLC, as financial advisor; OMNI AGENT SOLUTIONS, as claims and noticing agent.

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