Bonanza Creek Energy’s ad hoc equity committee filed with the U.S. Bankruptcy Court a redacted objection to the Company’s Amended Chapter 11 Plan.
The objection explains, “The Prepackaged Plan is not confirmable because it violates the absolute priority rule, as part of a brazen attempt by the Supporting Noteholders and Debtors’ conflicted management to abscond with the value that belongs to equity holders. This improper diversion of value is attempted through Debtors’ management’s support of an indefensibly low total enterprise valuation. The Ad Hoc Equity Committee has put its money where its mouth is, and offered a better and higher proposal (the ‘EC Proposal’) to the Debtors with no due diligence outs that requires the Ad Hoc Equity Committee to put up $350 million as part of its proposal based on the valuation it has submitted to this Court in support of this Objection.”
In addition, “Indeed, the market is not buying what the Supporting Noteholders and the Debtors are selling: the unsecured notes trade close to par. Even the Debtors’ own expert admits that the market values the Debtors almost…more the value that the Debtors would have this Court accept. This Court should similarly decline to buy what the Debtors are selling. As a result, this Court should conduct a valuation hearing and deny confirmation of the Plan pursuant to 11 U.S.C. Section 1129(b) because, as the Ad Hoc Equity Committee contends, equity is ‘in the money’ and unsecured creditors are being paid more than 100% of the value of their claims.”
The committee also filed a separate motion to file certain portions of this objection under seal.
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