PostRock EnergyCorp. and certain subsidiaries on April 1 filed voluntary petitionsfor relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. BankruptcyCourt for the Western District of Oklahoma to facilitate an orderly sale ofsubstantially all of their assets, according to a Form 8-K filed the same day.
Subsidiaries that filed voluntary petitions under Chapter 11of the bankruptcy code include PostRock Energy Services Corp., PostRock EasternProduction LLC, PostRock Holdco LLC, PostRock MidContinent Production LLC and STP Newco Inc.PostRock Energy and these subsidiaries, which filed a motion with the court seekingjoint administration of their Chapter 11 cases, will continue to operate theirbusinesses as "debtors-in-possession" throughout the wind-downprocess.
PostRock Energy said that after extensively exploringalternatives and thorough consultation with its legal and financial advisers,its board determined, in consultation with its secured lenders, that an orderlysale of the company's assets through a Chapter 11 process would be the mostprudent and effective way to maximize value for its creditors. PostRock Energydoes not expect any recovery for its stockholders and expects that itsstockholders will lose their entire investment.
PostRock Energy's operations have been significantlyimpacted by the "recent and dramatic" decline in oil prices, thecontinued low prices of natural gas and general uncertainty in the energymarket, the company said.
Constellation Energy Partners Management LLC, anothersubsidiary of PostRock Energy, filed a voluntary petition for liquidation underChapter 7 of the bankruptcy code in the court.
PostRock Energy on April 1 also disclosed the resignation ofDuke Ligon, Alexander Lynch, William Damon III, J. Philip McCormick and ClarkEdwards as directors, effective upon the appointment of a trustee in bankruptcy.The company noted in the Form 8-K filed April 1 that the resignations are notthe result of any disagreement with PostRock Energy regarding its operations,policies or practices, but are because of the filing of the bankruptcy cases.
The filing of the bankruptcy petitions constitutes an eventof default that accelerated the company's obligations under the third amendedand restated credit agreement, originally dated as of Dec. 20, 2012, by andamong the company, Citibank NA, as administrative and collateral agent, and thelenders party and other loan parties.
The debt instrument provides that as a result of thebankruptcy petitions the principal and interest due thereunder shall beimmediately due and payable. Any efforts to enforce such payment obligationsunder the debt instrument are automatically stayed as a result of thebankruptcy petitions, and the creditors' rights of enforcement in respect ofthe debt instrument are subject to the applicable provisions of the bankruptcycode.