The bankruptcy court overseeing the Chapter 11 proceedings of MD America Energy LLC on Dec. 14 confirmed the company's reorganization plan, according to a court order entered in the case.
As the filing was a prepackaged filing, the Houston bankruptcy court also approved the adequacy of the company's proposed disclosure statement.
The company filed for Chapter 11 on Oct. 12 with a proposed prepackaged reorganization plan supported by all of its term loan lenders, saying it expected to complete the bankruptcy process in 45-60 days. Under the plan, term loan lenders, with an allowed claim of about $117.8 million, would receive the equity in the reorganized company along with a new $60 million term loan, for a recovery rate of 51% based solely on the new term loan portion of the recovery.
The initial confirmation hearing date of Nov. 19, however, was delayed to Dec. 14 to give the company time to litigate a dispute with its equity owner, MeiDu Energy Corp., a publicly traded Chinese conglomerate, which filed an adversary action against the company alleging that the bankruptcy filing was not legally authorized. The bankruptcy court ruled against MeiDu and dismissed the adversary case on Dec. 8.
Extending the confirmation hearing date, however, also provided the company with additional time to resolve an objection to the plan filed by its former CEO, Eric Waller.
Court filings show that the company fired Waller for cause on Oct. 10 "following a comprehensive investigation," but the filings don't provide additional details. According to a court filing by Waller, however, the charges stem from an anonymous letter submitted to the company. Waller said that the details of the investigation have not been made available to him, adding that he "vigorously" denies that cause existed to terminate him. In addition, Waller had sought arbitration in the matter.
In a Dec. 11 court filing, the company said it had reached a settlement with Waller under which, among other things, the company would pay him $225,000 in cash, clearing the way for confirmation.