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Emerald Oil Objection Filed

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Wells Fargo Bank, as administrative agent filed, with the U.S. Bankruptcy Court a motion objecting to the motion for reconsideration or amendment of the Debtor’s DIP motion filed by Core Services, Stellar Field Services, Cache Trucking and Power Service, collectively, “the Movants”.

The administrative agent asserts, “If the Movants’ Motion to Reconsider or any of the Movants’ Objections are granted and the Court revises or denies the Interim DIP Financing Order, the result will be the occurrence of an Event of Default under the DIP Financing Agreement and termination of the Debtors’ authority to use cash collateral, immediately hamstringing the Debtors’ operations and causing a material deterioration of both the realizable value of the Lenders’ collateral as well as recoveries for the Debtors’ estates and for all other creditors. This Court should not permit Movants to impose such damage on the Debtors, their creditors and other stakeholders by denying the Debtors the very liquidity they need in order to complete the ongoing sale process….Movants’ arguments, however, are unavailing. First, Movants’ asserted interests in the Debtors’ collateral, as interests junior to an under-secured senior pre-petition creditor can be adequately protected by the adequate protection language that the Lenders are willing to include in the Final DIP Financing Order….Finally, there is no reason to subject the Lenders to marshalling in this case, because the Lenders are senior secured creditors who hold liens against substantially all of the Debtors’ valuable assets. There has been no showing that marshalling will yield additional benefits to junior lienholders, nor will the Lenders be able to locate an alternate source of funds to satisfy their claim were marshalling to occur. Thus, Movants have not stated grounds adequate to deny approval of the DIP Motion, and accordingly, the Motion to reconsider and each Objection should be denied.”

Read more on bankruptcies in the energy sector.

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