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Full title: Emergency Motion , Motion to Approve Compromise under Rule 9019 Filed by Debtor Castex Energy 2005 Holdco, LLC Hearing scheduled for 6/7/2021 at 10:00 AM at Houston, Courtroom 404 (MI). (Attachments: # 1 Proposed Order) (Curry, David) (Entered: 06/02/2021)
Document posted on Jun 1, 2021 in the bankruptcy, 14 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their businesses and managing their property as debtors in possession.The Debtors are also a party to numerous joint operating agreements, joint development agreements, exploration agreements, and area of mutual interest agreements, and own interests in certain fee lands.2 6.Bankruptcy Code section 363(f) authorizes a debtor to sell assets free and clear of liens, claims, interests and encumbrances if: (1) applicable non-bankruptcy law permits sale of such property free and clear of such interests; (2) such entity consents; (3) such interest is a lien and the price at which such property is to be sold is greater than the value of all liens on such property; (4) such interest is in bona fide dispute; or (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. Based on the above, the requirements of section 363(f) of the Bankruptcy Code can be satisfied, and the sale of the Transferred Interests to W&T free and clear of all liens, claims, encumbrances and other interests is appropriate.PRAYER WHEREFORE, the Debtors respectfully request that this Court enter the 9019 Order: (i) approving the terms of the Parties’ proposed Settlement; (ii) authorizing the Debtors to sell the Transferred Interests to W&T free and clear of liens, claims and encumbrances; and (iii) granting the Debtors such other and further relief as this Court may deem just and proper.
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Document ContentsIN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: § § Case No. 21-30710 CASTEX ENERGY 2005 HOLDCO, § LLC, et al., § Chapter 11 § Debtors.1 § (Jointly Administered) DEBTORS’ EMERGENCY MOTION FOR ENTRY OF AN ORDER: (I)APPROVING SETTLEMENT BETWEEN THE DEBTORS AND W&T OFFSHORE, INC.; AND (II) AUTHORIZING THE SALE OF TRANSFERRED INTERESTS EMERGENCY RELIEF HAS BEEN REQUESTED. IF THE COURT CONSIDERS THE MOTION ON AN EMERGENCY BASIS, THEN YOU WILL HAVE LESS THAN 21 DAYS TO ANSWER. IF YOU OBJECT TO THE REQUESTED RELIEF OR YOU BELIEVE THAT EMERGENCY CONSIDERATION IS NOT WARRANTED, YOU MUST FILE A WRITTEN RESPONSE PRIOR TO THE BELOW DATE BY WHICH RELIEF IS REQUESTED. OTHERWISE, THE COURT MAY TREAT THE REQUEST AS UNOPPOSED AND GRANT THE RELIEF REQUESTED. RELIEF IS REQUESTED NOT LATER THAN JUNE 7, 2021. Castex Energy 2005 Holdco, LLC and its related debtor affiliates (the “Debtors”) file this Motion (the “Motion”) for Entry of an Order: (I) Approving Settlement Between the Debtors and W&T Offshore, Inc. (“W&T”); and (II) Authorizing the sale of Transferred Interests, and in support hereof, respectfully state as follows: 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Castex Energy 2005 Holdco, LLC (6832); Castex Energy 2005, LLC (6832); Castex Energy Partners, LLC (6832); and Castex Offshore, Inc. (8432). The Debtors’ mailing address is One Memorial City Plaza, 800 Gessner Rd., Suite 925, Houston, Texas 77024.
1I. JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. § 1334. Consideration of this Motion is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (C), (E), (F), (N) and (O). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. 2. The statutory predicates for the relief requested in this Motion are sections 105(a), 363, and 553(b) of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended and modified, the “Bankruptcy Code”), Rules 2002 and 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), Rules 2002-1 and 9013-1 of the Bankruptcy Local Rules for the Southern District of Texas (the “Bankruptcy Local Rules”), and the Procedures for Complex Chapter 11 Cases in the Southern District of Texas (the “Complex Case Procedures”). II. BACKGROUND A. The Chapter 11 Cases 3. On February 26, 2021 (the “Petition Date”), the Debtors filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Court”). 4. Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their businesses and managing their property as debtors in possession. The United States Trustee for the Southern District of Texas appointed an Official Committee of Unsecured Creditors on March 10, 2021 [ECF # 75]. No request has been made for the appointment of a trustee or examiner. 5. The Debtors, which maintain their headquarters in Houston, Texas, are engaged in the exploration, development, production and acquisition of oil and natural gas properties located in the Gulf of Mexico, state waters of Louisiana, onshore Louisiana, and onshore Texas. As of the Petition Date, the Debtors owned interests in approximately 182 oil, gas, and related wells, and
2have estimated proven reserves of approximately 2.3 MMBO (oil and gas condensate) and 38.5 BCFE (natural gas). The Debtors are also a party to numerous joint operating agreements, joint development agreements, exploration agreements, and area of mutual interest agreements, and own interests in certain fee lands.2 6. On April 5, 2021, the Court entered the Order (I) Authorizing the Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (II) Granting Adequate Protection to the Prepetition Secured Parties, (III) Granting Liens and Superpriority Claims, (IV) Modifying the Automatic Stay, and (V) Scheduling a Final Hearing [ECF # 149] (the “Cash Collateral Order”). The Cash Collateral Order incorporates and effectuates certain agreements between the Debtors and Capital One, National Association, individually as a secured lender, as L/C Issuer and as administrative agent for the Debtors’ prepetition secured lenders (in such capacity, the “Prepetition Agent”) and the Debtors’ prepetition secured lenders (the “Prepetition Secured Lenders,” and, together with the Prepetition Agent and any other party to which Secured Debt Claims (as defined in the Cash Collateral Order) are owed, the “Prepetition Secured Parties”), regarding the Debtors’ use of Cash Collateral during these Chapter 11 Cases. 7. On April 22, 2021, the Debtors filed their Second Amended Joint Chapter 11 Plan [ECF # 205] (the “Plan”) and Second Amended Disclosure Statement in Support of Joint Chapter 11 Plan [ECF # 206]. 8. On April 26, 2021, the Court entered the Order Conditionally Approving (I) Adequacy of the Disclosure Statement; (II) Form of Solicitation Materials; and (III) Procedures for Soliciting and Voting on the Joint Chapter 11 Plan [ECF # 214] (the “Disclosure Statement 2Additional information regarding the Debtors’ business, capital structure, and the circumstances leading to the commencement of these Chapter 11 Cases is set forth in the Declaration of Douglas J. Brickley, Chief Restructuring Officer of the Debtors, in Support of Chapter 11 Petitions and First Day Motions [ECF # 13] (the “First Day Declaration”), which is incorporated herein by reference.
3Approval Order”), which among other provisions: (a) scheduled a hearing to consider confirmation of the Debtors’ Plan for May 27, 2021 at 9:30 a.m.; and (b) set May 20, 2021 as the deadline for filing written objections to confirmation of the Plan. B. The Plan and W&T’s Objection to Confirmation 9. As set forth above, the Debtors own interests in various oil and gas properties. Under applicable federal and state laws and regulations, as well as certain contracts related to the ownership and operation of the Debtors’ oil and gas properties, the Debtors are liable for certain plugging and abandonment or decommissioning obligations (the “P&A Obligations”). 10. Under the terms of the Plan, the Debtors’ ability to perform P&A Obligations are limited. Pursuant to the Plan, the Debtors propose to establish a Liquidating Trust3 and to use the Liquidating Trust Assets to satisfy P&A Obligations related to certain identified properties – the Funded P&A Obligations. The Debtors propose to abandon all other interests in their oil and gas assets unless such properties are transferred prior to the Effective Date. A schedule of the Debtors’ oil and gas assets to be abandoned under the Plan (the “Abandoned Interests”) is attached as Exhibit A to the Plan. 11. Included in the Abandoned Interests is the Debtors’ interest in and to that certain onshore well commonly referred to High Island Block 024-L (“HI 24-L”). W&T is the operator of record for HI 24-L and has, through counsel, informally indicated to counsel for the Debtors an objection (the “Objection”) to the proposed abandonment of the Debtors’ interest and treatment of any claims that W&T may have against the Debtors as a result thereof. 3 Capitalized terms used but not defined in this Motion have the meanings ascribed to them in the Debtors’ Plan.
4III. SUMMARY OF TERMS OF PROPOSED SETTLEMENT AND COMPROMISE 12. The Debtors and W&T (collectively, the “Parties”) have agreed to resolve the Objection pursuant to the terms set forth herein and in the proposed order filed contemporaneously with this Motion (the “Settlement”). The Settlement remains subject to: (i) entry of an order approving the Settlement and transfer of the Transferred Interests (defined below) pursuant to section 363 of the Bankruptcy Code and Bankruptcy Rule 9019 (the “9019 Order”); and (ii) execution of mutually agreeable settlement and transfer documentation, as reasonably necessary to effectuate the terms of the Settlement. The following is a summary of the material terms of the Parties’ Settlement agreement: i. The Debtors will transfer all of their interests in HI 24-L, the associated pipeline right-of-ways and any ORRI on Ship Shoal BLK 314/5 (collectively, the “Transferred Interests”) free and clear of liens, claims, encumbrances and interests (other than those specifically assumed by W&T) by quitclaim deed; ii. W&T will assume all of the Debtors’ obligations on a going forward basis, including their P&A Obligations, arising from and related to the Debtors’ interest in HI 24-L; iii. W&T will withdraw, waive, and release any claims, except that claim filed against the Debtors on account of $250,000 for outstanding JIB payments (the “JIB Claim”) arising from or related to HI 24-L, or the Debtors’ interests therein; iv. The Debtors shall release W&T from any and all claims arising from or related to HI 24-L, or the Debtors’ interests therein; v. The Debtors’ stipulate and agree to the amount and validity of the JIB Claim; vi. The JIB Claim shall be an Allowed General Unsecured Claim pursuant to the Plan for which claim W&T shall be deemed to have voted to accept the Debtors’ Plan; and vii. The Parties each reserve any and all other rights.
5IV. ARGUMENT AND AUTHORITY A. Approval of the Settlement 13. Section 105(a) of the Bankruptcy Code provides, in pertinent part, that the “[c]ourt may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions” of the Bankruptcy Code. 11 U.S.C. § 105(a). Bankruptcy Rule 9019 governs the procedural prerequisites for approval a settlement to which the debtor is party and provides that “[o]n motion by the [debtor-in-possession] and after notice and a hearing, the court may approve a compromise or settlement.” FED. R. BANKR. P. 9019(a). 14. The Fifth Circuit has explained that: [t]he bankruptcy court’s power to approve a proposed settlement or “compromise” of the estate’s claims arises under rule 9019 of the Federal Rules of Bankruptcy Procedure. A proposed settlement must be “fair and equitable” and in the best interests of the estate. Five factors inform the “fair and equitable” analysis: (1) the probability of success in the litigation, with due consideration for the uncertainty in fact and law; (2) the complexity and likely duration of the litigation and any attendant expense, inconvenience, and delay, including the difficulties, if any, to be encountered in the matter of collection; (3) the paramount interest of the creditors and a proper deference to their respective views, (4) the extent to which the settlement is truly a product of arm’s-length bargaining and not fraud or collusion; and (5) all other factors bearing on the wisdom of the compromise. The Cadle Co. v. Mims (In re Moore), 608 F.3d 253, 263 (5th Cir. 2010); see also In re Shankman, 2010 WL 743297, at *3 (Bankr. S.D. Tex. Mar. 2, 2010) (setting forth the same five-factor test); In re Berleth, 2020 WL 522710, at *23, n. 204 (S.D. Tex. Jan. 31, 2020) (quoting Matter of Foster Mortg. Corp., 68 F.3d 914, 917 (5th Cir. 1995) (“[b]efore approving a settlement under Rule 9019, a bankruptcy court must be satisfied that the settlement is ‘fair and equitable and in the best interest of the estate.’”). 15. “[C]ompromises are a normal part of the process of reorganization, oftentimes desirable and wise methods of bringing to a close[,] proceedings otherwise lengthy, complicated and costly.” Shankman, 2010 WL 743297, at *3 (quoting Official Comm. of Unsecured Creditors
6v. Cajun Elec. Power Coop., Inc. (In re Cajun Elec. Power Coop.), 119 F.3d 349, 354 (5th Cir. 1997)); see also Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968). The “burden is not high,” and the compromise need only be shown to fall “within the ‘range of reasonable litigation alternatives.’” Shankman, 2010 WL 743297, at *3 (quoting Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 1983), cert. denied, 464 U.S. 822 (1983)); citing Cook v. Waldron, 2006 WL 1007489, at *4 (S.D. Tex. Apr. 18, 2006)). The Court “need not ‘conduct a mini-trial to determine the probable outcome of any claims waived in the settlement.’” Id. (quoting Cajun Elec., 119 F.3d at 355). The Court must exercise its discretion and determine whether the settlement is “fair and reasonable under the circumstances.” Id. (citing Cook, 2006 WL 1007489, at *4). “To assure a proper compromise the bankruptcy judge must be apprised of all the necessary facts for an intelligent, objective and educated evaluation.” Id. (quoting Matter of Jackson Brewing Co., 624 F.2d 599, 602 (5th Cir. 1980)). 16. The merits of a proposed compromise should be judged under the criteria set forth in Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968). Anderson requires that a compromise must be “fair and equitable.” Anderson, 390 U.S. at 424; In re AWECO, Inc., 725 F.2d 293, 298 (5th Cir. 1984), cert. denied, 469 U.S. 880 (1984). The terms “fair and equitable” mean that (a) senior interests are entitled to full priority over junior interests; and (b) the settlement is reasonable in relation to the likely rewards of litigation. Cajun Elec., 119 F.3d at 355; Jackson Brewing Co., 624 F.2d at 602. In particular, the Court must evaluate and set forth in a comprehensible fashion: (1) The probability of success in the litigation, with due consideration for the uncertainty in fact and law, (2) The complexity and likely duration of the litigation and any attendant expense, inconvenience and delay, and
7(3) All other factors bearing on the wisdom of the compromise. Jackson Brewing Co., 624 F.2d at 602 (internal citation omitted). 17. With respect to the first factor, it is unnecessary to conduct a mini-trial to determine the probable outcome of any claims waived in the settlement. Cajun Elec., 119 F.3d at 356. “‘The judge need only apprise himself of the relevant facts and law so that he can make an informed and intelligent decision . . . .’” Id. (quoting La Salle Nat’l Bank v. Holland (In re American Reserve Corp.), 841 F.2d 159, 163 (7th Cir. 1987)). 18. Under the rubric of the third, catch-all provision, the Fifth Circuit has specified two additional factors that bear on the decision to approve a proposed settlement. First, the Court should consider the best interests of the creditors, “with proper deference to their reasonable views.” Connecticut Gen. Life Ins. Co. v. United Cos. Fin. Corp. (In re Foster Mortgage Corp.), 68 F.3d 914, 917 (5th Cir. 1995). Second, the Court should consider “the extent to which the settlement is truly the product of arms-length bargaining, and not of fraud or collusion.” Id. at 918 (internal citations omitted). 19. As discussed below, applying this standard to the facts of the instant case, the Debtors submit that the proposed Settlement should be approved. i. Likelihood of Success 20. Although the Debtors are confident that they would prevail in litigation regarding the Objection, the Debtors acknowledge the inherent risks of litigation. W&T has asserted a colorable objection to the Debtors’ Plan and the proposed treatment of certain P&A Claims (as defined in the Plan). The Settlement avoids any litigation costs or uncertainty resulting from W&T’s continued prosecution of the Objection.
8ii. Potential Duration and Expense 21. Given the milestones set forth in the Cash Collateral Order, the duration of litigation regarding Plan and the Objection is not applicable in evaluating this proposed Settlement. Nevertheless, given that the Debtors propose to abandon their interest in HI 24-L, the benefits to the Debtors and their estates regarding certainty of outcome vis-à-vis the Objection easily outweigh any cost associated with prosecuting a contested confirmation hearing regarding the Plan. Accordingly, notwithstanding the limited duration of potential litigation, this factor weighs heavily in favor of the Settlement. iii. The Wisdom of the Compromise a. Desires of the Creditors 22. The Fifth Circuit has instructed that the “desires of the creditors are not binding.” Cajun Elec., 119 F.3d at 358 (citing Foster Mortgage Corp., 68 F.3d at 917). “The test is not the desires of the majority [of creditors] as such, but the best interests of the creditors, taking into account their reasonable views.” Id. The terms of the proposed Settlement have been provided to counsel for the Committee and counsel for the Prepetition Secured Lenders. Neither constituency opposes the Settlement. b. Arms-Length Negotiations 23. The Settlement is the result of arms-length negotiations between the Debtors and W&T. There is no evidence that would indicate that the Settlement resulted from any improperly collusive mechanism. 24. In sum, the Debtors acknowledge that a certain degree of uncertainty always exists with respect to litigation. The Debtors respectfully submit that the Settlement fairly recognizes such risks and provides for the resolution of the Objection without the need for continued costly
9litigation. The Parties have attempted to achieve a resolution that minimizes the potential damage and risk to the Debtors’ estates and maximizes value. Consequently, the Debtors urge that the factors established by the Fifth Circuit are satisfied, and the Court should approve the Settlement. B. Approval of the Sale of Certain Transferred Interests i. The Sale of the Transferred Interests is Supported by Sound Business Judgment 25. The Debtors further request that the Court approve the sale of the Transferred Interests to W&T. The Debtors submit that the sale of the Transferred Interests is in the best interest of the Debtors’ estates and their creditors. 26. Bankruptcy Code section 363(b)(1) provides that a debtor, “after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). To approve the use, sale or lease of property outside the ordinary course of business, this Court need only determine that the Debtors’ decision is supported by “some articulated business justification,” as established by the Second Circuit in Committee of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2nd Cir. 1983), which decision has been adopted in the Fifth Circuit. Institutional Creditors of Continental Air Lines, Inc. v. Continental Air Lines, Inc., et al. (In re Continental Air Lines, Inc.), 780 F.2d 1223, 1226 (5th Cir. 1986); see also, Fulton State Bank v. Schipper, 933 F.2d 513, 515 (7th Cir. 1991); In re San Jacinto Glass Industries, Inc., 93 B.R. 934, 944 (Bankr. S.D. Tex. 1988); In re Condere Corp., 228 B.R. 615, 628-69 (Bankr. S.D. Miss. 1998). 27. The business judgment rule shields a debtor’s management from judicial second-guessing. See In re Johns-Manville Corp., 60 B.R. 612, 615-16 (Bankr. S.D.N.Y. 1986) (“a presumption of reasonableness attaches to a debtor’s management decisions”). Once a debtor articulates a valid business justification, “[t]he business judgment rule ‘is a presumption that in
10making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action was in the best interests of the company.’” In re Integrated Resources, Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)). Thus, if a debtor’s actions satisfy the business judgment rule, then the transaction in question should be approved under section 363(b)(1) of Bankruptcy Code. 28. When applying the business judgment standard, courts show great deference to a debtor’s business decisions. See GBL Holding Co., Inc. v. Blackburn/Travis/Cole, Ltd., 331 B.R. 251, 254 (N.D. Tex. 2005); In re First Wellington Canyon Assocs., 1989 U.S. Dist. LEXIS 10687, at *8-9 (N.D. Ill. Sep. 8, 1989) (“Under this test, the debtor’s business judgment . . . must be accorded deference unless shown that the bankrupt’s decision was taken in bad faith or in gross abuse of the bankrupt’s retained discretion.”); In re Delaware & Hudson Ry. Co., 124 B.R. 169 (D. Del. 1991); In re Phoenix Steel Corp., 82 B.R. 334, 335-36 (Bankr. D. Del. 1987) (stating that judicial approval of a section 363 sale requires a showing that the proposed sale is fair and equitable, a good business reason exists for completing the sale and that the transaction is in good faith). 29. The Debtors respectfully submit that their proposed sale of Transferred Interests outside the ordinary course of business fits squarely within the parameters of the sound business judgment test, taking into consideration that the Debtors lack sufficient capital to maintain operation of the Transferred Interests or to meet certain obligations arising from or related to the Debtors’ ownership of the Transferred Interests. Accordingly, under the current circumstances, selling the Transferred Interests is highly attractive and beneficial to the Debtors and their estates. Indeed, under the Debtors’ proposed Plan, HI 24-L will be abandoned upon the Effective Date of the Plan. Further, given the nature of the assets and the liabilities associated therewith, the universe
11of potential purchasers of the Transferred Interests is narrow, and W&T, as the contractual operator of HI 24-L, is the party most likely to be both interested and able to complete a purchase of these assets. Further, the amount of P&A Obligations to be assumed by W&T reduces the prospect of damage to other third parties who might have to step up for at least a part of the Debtors’ share of the P&A Obligations under various ownership interests and JOAs. 30. Under these circumstances, the Debtors have determined that it is in the best interests of the estates to consummate a sale of the Transferred Assets to W&T. ii. The Sale of The Transferred Interests Free and Clear of Liens, Claims, and Encumbrances Is Authorized Under Bankruptcy Code Section 363(f) 31. The Debtors respectfully request that the sale and transfer of the Transferred Interests be approved free and clear of all liens, claims, encumbrances and other interests (other than those specifically assumed by W&T). Such relief is consistent with the provisions of section 363(f) of the Bankruptcy Code in these types of cases. 32. Bankruptcy Code section 363(f) authorizes a debtor to sell assets free and clear of liens, claims, interests and encumbrances if: (1) applicable non-bankruptcy law permits sale of such property free and clear of such interests; (2) such entity consents; (3) such interest is a lien and the price at which such property is to be sold is greater than the value of all liens on such property; (4) such interest is in bona fide dispute; or (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 11 U.S.C. § 363(f). This provision is supplemented by Bankruptcy Code section 105(a), which provides that “[t]he Court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a).
1233. Because Bankruptcy Code section 363(f) is drafted in the disjunctive, satisfaction of any one of its five requirements will suffice to permit the sale of the Transferred Interests free and clear. In re Nature Leisure Times, LLC, 2007 WL 4554276, *3 (Bankr. E.D. Tex. Dec. 19, 2007) (“[t]he language of § 363(f) is in the disjunctive such that a sale free and clear of an interest can be approved if any one of the aforementioned conditions contained in § 363(f) are satisfied.”); In re Wolverine Radio Co., 930 F.2d 1132, 1147 n.24 (6th Cir. 1991) (stating that Bankruptcy Code section 363(f) is written in the disjunctive; holding that the court may approve the sale ‘free and clear’ provided at least one of the subsections of section 363(f) is met). 34. The Debtors believe that one or more of the tests under section 363(f) will be satisfied with respect to the transfer of the Transferred Interests. In particular, the Debtors contend that, taking into account all associated regulatory and other operating liabilities, the value of any liens against the Transferred Interests is significantly less than the purchase price (i.e., the assumption of the Debtors’ P&A Obligations arising from or related to the Debtors’ interest in HI 24-L). Further, given that the Prepetition Secured Parties have determined to release liens (or would ultimately release liens) in, to, or upon the Transferred Interests in connection with the Plan, the Debtors believe that Prepetition Secured Parties will consent to the transfer. The Debtors additionally believe section 363(f)(5) is satisfied. Based on the above, the requirements of section 363(f) of the Bankruptcy Code can be satisfied, and the sale of the Transferred Interests to W&T free and clear of all liens, claims, encumbrances and other interests is appropriate. 35. The Debtors further request a finding that W&T is purchasing the Transferred Interest in good faith and is thus entitled to the protections of 11 U.S.C. § 363(m). 36. The Debtors further request an order waiving the 14-day stay imposed by the Federal Rule of Bankruptcy Procedure 6004(h).
13V. PRAYER WHEREFORE, the Debtors respectfully request that this Court enter the 9019 Order: (i) approving the terms of the Parties’ proposed Settlement; (ii) authorizing the Debtors to sell the Transferred Interests to W&T free and clear of liens, claims and encumbrances; and (iii) granting the Debtors such other and further relief as this Court may deem just and proper. Respectfully submitted on the 2nd day of June, 2021. OKIN ADAMS LLP By: /s/ David L. Curry, Jr. Matthew S. Okin Texas Bar No. 00784695 Email: firstname.lastname@example.org David L. Curry, Jr. Texas Bar No. 24065107 Email: email@example.com Ryan A. O’Connor Texas Bar No. 24098190 Email: firstname.lastname@example.org Johnie A. Maraist Texas Bar No. 24109505 Email: email@example.com 1113 Vine St., Suite 240 Houston, TX 77002 Tel: (713) 228-4100 Fax: (888) 865-2118 ATTORNEYS FOR THE DEBTORS CERTIFICATE OF ACCURACY PURSUANT TO B.L.R. 9013-1(i) In accordance with Bankruptcy Local Rule 9013-1(i), I hereby certify the accuracy of the matters set forth in the foregoing Motion. By: /s/ David L. Curry, Jr. David L. Curry, Jr.