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Escalera Resources Objections Filed

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Escalera Resources and Societe Generale filed with the U.S. Bankruptcy Court separate objections to the official committee of unsecured creditors’ motion to appoint a Chapter 11 trustee.

Escalera Resources asserts, “Since the Court denied approval of the Disclosure Statement, Debtor has continued discussions with its senior lenders regarding a revised Plan and Disclosure Statement. Moreover, Debtor and its senior lenders have discussed the possibility of conducting a process for sale of Debtor’s assets in parallel with the plan process. Debtor anticipates filing a motion to retain an investment banker in the next few days to conduct a sale process, and expects to file the revised Plan incorporating a plan process as an option to reorganization within the next few weeks.”

The objection continues, “The Committee fails to allege that cause exists to appoint a chapter 11 trustee. The Committee does not argue the existence of fraud, dishonesty, incompetence, or gross mismanagement of Debtor’s affairs. Instead, the Committee argues that (1) Debtor has not made any progress in its chapter 11 case, and (2) Debtor is losing money each month. Both of these assertions are without merit.”

In addition, “Since the Petition Date, Debtor’s management has drastically reduced spending by trimming personnel from top to bottom and restructuring its operations. Debtor, its management, and its senior lenders are confident in its ability to emerge from chapter 11. Further, Debtor’s chapter 11 case has been pending for over one year. At this stage, the appointment of a trustee will result in further expense to the estate and delay of Debtor’s reorganization because a trustee will not be familiar with Debtor’s history or the facts of the case.”

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