August 26, 2019
Another day, another oil-related bankruptcy filing. Houston-based Epic Companies LLC and six affiliated companies filed for chapter 11 on August 26, 2019 in the Southern District of Texas (Judge Jones presiding) to effectuate a sale to its pre-petition and post-petition lender, White Oak Global Advisors LLC.* White Oak intends to credit bid $48.9mm and assume $40mm of the debtors’ debt. It then hopes to flip the assets — that’s right, flip the assets — to a secondary buyer, Alliance Energy Services LLC, for $40mm and the assumption of $35mm of debt. The debtors hope to consummate the transaction within 65 days. This is bankruptcy today folks: super speedy cases tied to aggressive DIP milestones. Why? In large part, because bankruptcy is too frikken inefficient and expensive to go about a sale transaction otherwise. This is why it’s imperative to have a robust pre-petition marketing process. Here, there’s the added element of the secondary sale.
Formed in Q1 2018, the debtors service the oil and gas industry through heavy lift, diving and marine, specialty cutting and well-plugging and abandonment services. Said another way, these guys work with oil and gas companies at the end of the well lifecycle.
Speaking of the end of lifecycles, the company has been in trouble from the get-go. After spending a year acquiring assets, the debtors already had to start divesting by April of 2019. White Oak foreclosed on equity interests in three entities in July 2019. The company still owns three heavy lift and diving vessels, other equipment, IP, and real property. They owe $106.9mm under a senior loan** and $124.8mm under a junior loan. Unsecured trade debt is $30mm. Other liabilities include litigations against the debtors’ vessels.
Why is this company in bankruptcy? They’re very to the point:
Like many in their industry, the downturn in oil and natural gas prices and other industry-related challenges negatively impacted the Debtors' liquidity position.
Consequently, White Oak called a default and has been driving the bus ever since: in July, White Oak informed management that it was done sinking money into this morass. Five days later, the debtors terminated 400 employees. 28 employees remain. Sadly, their future is decidedly more uncertain today than it was even two months ago.
*Prior to the voluntary filing, one of the debtors was involuntaried in Louisiana.
**Once White Oak exercised remedies, it then restated the debtors’ senior debt into three separate facilities. Acqua Liana, as junior lender, followed suit vis-a-vis the junior loan.
Jurisdiction: S.D. of Texas (Judge Jones)
Capital Structure: see above.
Legal: Porter Hedges LLP (John Higgins, M. Shane Johnson, Genevieve Graham)
Financial Advisor/CRO: S3 Advisors LLC (“G2”) (Jeffrey Varsalone)
Claims Agent: Epiq Bankruptcy Solutions LLC (*click on the link above for free docket access)
Other Parties in Interest:
Prepetition Senior Loan Lender & Postpetition Lender & Stalking Horse Purchaser: White Oak Global Advisors LLC
Prepetition Junior Loan Lender: Acqua Liana Capital Partners LLC