A group of noteholders for some of Sanchez Energy Corp.'s debt is objecting to an Aug. 12 motion submitted by the company to obtain post-petition credit.
As part of the Chapter 11 filing, Sanchez Energy filed several customary motions to authorize the company to pay certain pre-petition obligations. Among other things, these motions seek authorization for Sanchez Energy to continue to operate and to incur debts in the ordinary course of business following the bankruptcy filing.
However, the group of lenders, which hold more than 65% of the aggregate amount of 7.75% senior notes and 6.125% senior notes, objected Aug. 13 to Sanchez Energy's motion. They contend that under bankruptcy rules, Sanchez Energy would only be permitted to obtain credit to avoid immediate and irreparable harm to the estate pending a final hearing, and no such emergency exists.
The noteholders further contend that the company showed no inclination to work with the group ahead of the bankruptcy petition filing.
The noteholders said they made several attempts to work with Sanchez Energy and its first-lien noteholders. On two occasions, they provided Sanchez Energy proposals to address the company's capital needs to maximize value. The group also made unsuccessful offers to first-lien noteholders to minimize "the administrative costs of lengthy and contested chapter 11 cases," they said.
Instead, knowing bankruptcy was inevitable, Sanchez Energy and first-lien noteholders took action to improve their position significantly, the group said.