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Saratoga Resources Plan Filed

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Saratoga Resources filed with the U.S. Bankruptcy Court a Chapter 11 Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, principal features of the Plan include the following: “Provide for the continued operation of the Debtors’ business on a scaled down version after confirmation, with essentially all Assets of the Debtors transferred to, and Claims channeled, to a Litigation Trust to be established under the Plan; Provide for the distribution of the Plan Related Funds in accordance with the Cash Collateral Stipulation and the Plan; Provide for the distribution of the Convenience Fund to the holders of Convenience Claims; Establish a Litigation Trust to pursue the Litigation Trust Causes of Action and to distribute any Litigation Trust Net Proceeds to the holders of superpriority claims, Administrative Expense Claims and General Unsecured Claims; Provide for the transfer of all assets of the Debtors (other than Excluded Assets),including essentially all claims of the estates to the Litigation Trust.”

The Disclosure Statement continues, “If Classes 1 (First Lien Lenders), 3 (Convenience Claims) and 4 (General Unsecured Claims) vote to accept the Plan, then as part of a settlement of, among other things, the amount of its superpriority Claims against the estates, ERG II will subordinate the payment of its ERG II Superpriority Claim to the payment of up to $2 million of unsecured pre-petition trade debt from net proceeds of the Litigation Trust. If Classes 1, 3 and/or 4 do not vote to accept the Plan, then ERG II will not subordinate the recovery of the ERG II Superpriority Claim to the payment of the unsecured pre-petition trade debt; Provide that certain assets – the Excluded Assets – of the Debtors which are not transferred to the Litigation Trust will be retained by the Reorganized Debtors; Provide that if Classes 1, 3 (Convenience Claims) and 4 (General Unsecured Claims) vote to accept the Plan, then the existing stockholders of Saratoga will retain their equity interests in Reorganized Saratoga.”

The Disclosure Statement further notes, “If Classes 1, 3 (Convenience Claims) and/or 4 (General Unsecured Claims) do not vote to accept the Plan, then the Existing Equity Interests in Saratoga will be cancelled and New Equity Interests in Reorganized Saratoga will be issued to the Litigation Trust, LLC and; Provide for the cancellation of the liens securing the First Lien Claims and Second Lien Claims and any other Secured Claims (to the extent not already cancelled at the time of the Sale to ERG II).”

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