Atlas Resource Partners Enters Bankruptcy With Debt-Cut Plan

  • Company joins dozens of oil and gas drillers in Chapter 11
  • Restructuring plan has backing of lender groups, Atlas says

Atlas Resource Partners LP filed for bankruptcy Wednesday to execute a restructuring plan that it has said will cut debt by about $900 million and reduce interest expense by $80 million.

Atlas joins dozens of struggling oil and gas producers that were pushed into Chapter 11 after energy prices began declining in 2014. The company is going in with a restructuring plan already worked out with lender groups, a path that companies including SandRidge Energy Inc. and Linn Energy LLC have also followed.

Since the beginning of 2015, at least 85 North American oil and gas producers have gone bankrupt, according to Haynes & Boone LLP. Those cases involve about $61.2 billion in cumulative debt, the law firm said in a June 30 report.

Atlas, which is based in Pittsburgh and has offices in Fort Worth, Texas, listed liabilities of $1.5 billion and assets of $1.3 billion in its filing in U.S. Bankruptcy Court in New York.

Under the restructuring plan announced in a July 25 statement, $668 million of senior secured notes convert into a 90 percent equity stake in a reorganized business, to be known as Titan Energy LLC. The company said it will also raise money to pay down debt by selling natural gas and oil hedge positions.  

Second Lien

All second-lien lenders, all revolving credit facility lenders and about 80 percent of senior lenders supported the accord, according the statement. Business will continue as usual during the reorganization, Atlas said.

Unsecured creditors will be paid in full. Second-lien creditors will get the remaining 10 percent of equity and a new $250 million credit facility with a modified interest rate. The company plans to exit bankruptcy by the end of August with total funded debt of $690 million.

The arrangement must be approved by the bankruptcy judge. Atlas is requesting a combined hearing Aug. 26 to approve the disclosure statement, which explains the plan, and to confirm the plan itself. Objections would be due by Aug. 19.

The case is In re Atlas Resource Partners LP, 16-12149, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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