The U.S. Trustee (UST) assigned to the Core Resource Management case filed with the U.S. Bankruptcy Court a motion to convert or dismiss the bankruptcy case.
The UST asserts, “To date, Debtor has yet to provide evidence of possessing any adequate insurance for any of its assets. Furthermore, at the final cash collateral hearing held on Thursday, July 21, 2016, the UST learned that one of Debtor’s wells may have been vandalized and damaged….The enumerated grounds for dismissal or conversion are set forth in section 1112(b) and include: (C) Failure to maintain appropriate insurance that poses a risk to the estate or to the public; Section 1112(b) (4). The UST asserts that sufficient cause exists to grant this Motion under the foregoing element of section 1112(b). Debtor has indicated that it has failed to obtain adequate insurance due to insufficient funding in the company.”
The motion continues, “Debtor’s uninsured oil wells and drilling equipment is a significant risk for personal injury and possible environmental hazards, which exposes the estate to liability of environmental cleanups, accidental pollution incidents, property and resource damage, and third party actions. Most concerning is that the estate may have already suffered harmed by not having any insurance to cover against the alleged vandalism and damage to one of Debtor’s wells. For the foregoing reasons, the failure to possess adequate insurance constitutes cause for, or weighs heavily in favor of, conversion or dismissal. The UST respectfully requests this Bankruptcy Court to dismiss or to convert this case for ’cause.'”
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