Nine Point Energy Holdings Inc's lenders must put up cash or a letter of credit to protect a midstream services provider’s interests in certain assets before they can move forward with a proposed $250 million purchase of the bankrupt energy company, a judge ruled on Monday, Reuters reported. U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, issued her ruling during a virtual hearing that Caliber Midstream Partners LP has statutory liens on certain assets related to around $7.1 million in claims. However, she rejected Caliber’s assertion that it has liens backing Caliber’s larger $150 million claim against Nine Point. The dispute has delayed Nine Point’s efforts to sell its assets to its lenders via a bankruptcy sale. Nine Point had around $273 million in debt when it sought chapter 11 protection in March. The Denver-based company, which blamed its financial trouble on the combined impact of the COVID-19 pandemic and Russia-OPEC oil price war, is approaching a July 8 deadline to sell its assets under its loan agreement with the lenders. Its exploration and production services are focused in North Dakota and Montana. Caliber argues that Nine Point can’t go through with the sale to lenders unless Caliber receives adequate protection of its liens, which largely stem from oil and gas gathering, processing and transporting services it provided Nine Point. At the conclusion of Monday’s hearing, Caliber attorney Kevin Barrett rejected an offer from the lenders to assume the liability, with a cap of $7.1 million, for the exact amount the court ultimately deems the valid claims to be worth — which she did not do as part of her ruling. Judge Walrath agreed with Barrett, saying that the lenders need to either set aside some money in escrow, issue a letter of credit or grant a replacement lien for Caliber. “It’s not enough to promise to pay a claim in the future,” she said. Lawyers for the parties will return to Judge Walrath’s virtual hearing on Tuesday to determine how to proceed.
