Castex Energy Partners LP, a Houston-based oil-and-natural-gas driller, is pushing back at a hedge fund’s bid to characterize its holdings of preferred units in a Castex partnership as a creditor claim rather than equity, WSJ Pro Bankruptcy reported. In a filing on Wednesday in U.S. Bankruptcy Court in Houston, Castex’s lawyers said OHA Asset Holdings II, a fund dubbed OHAI and managed by Oak Hill Advisors, holds an equity security interest and not a claim. At issue is the hedge fund’s purchase of $50 million in redeemable preferred units in a Castex partnership, which paid the fund a fixed rate of return and included a put right obligating the partnership to buy back OHAI’s equity investment at a certain date. Castex’s lawyers say the fund’s right to redeem the preferred units — even if exercised — are equity interests because they aren’t guaranteed the right to payment, as claims are, but rather are dependent on the solvency of the company.
