2) Basis of Presentation
The purpose of the Plan is to effectuate the completion of a sale (the Sale Transaction) of substantially all of the Debtors assets (the Assets), and the orderly wind down of the Debtors affairs through the distribution of: (i) the proceeds from the Sale Transaction and (ii) other assets of the Estate for the benefit of holders of Allowed Claims pursuant to the Plan and the Bankruptcy Codes priority distribution requirements.
On February 10, 2017, the Debtors and M5 Midstream LLC (the Stalking Horse Bidder) entered into a purchase and sale agreement (the Stalking Horse Agreement) representing a binding bid for the Assets subject to overbid. The total consideration available to the Debtors under the Stalking Horse Agreement was approximately $151,100,000.00, subject to certain adjustments (the Stalking Horse Purchase Price).
On March 6, 2017, BTA Gathering LLC (BTA) submitted a competing bid to purchase the Assets for $160,000,000.00 and provided to the Debtors a draft purchase and sale agreement. On March 10, 2017, the Debtors conducted an auction (the Auction) for the Assets. At the conclusion of the Auction, the Debtors, in consultation with their advisors and the advisors to the Administrative Agent selected the final bid submitted at the Auction by BTA Gathering LLC (BTA) for a purchase price of $189,000,000.00 (the Successful Bid) with BTA serving as the successful bidder. Net of certain purchase price adjustments and bid protections due to the Stalking Horse Bidder, the proceeds of the Successful Bid totaled $183,487,000.00. On March 15, 2017, the Bankruptcy Court conducted a hearing to consider approval of the sale of the Assets to BTA, free and clear of all liens, claims, interests, and encumbrances in accordance with section § 363(f) of the Bankruptcy Code. The Bankruptcy Court entered an order approving the sale of the Assets to BTA on March 15, 2017 (the Sale Order).
The Liquidation Analysis assumes the Sale Transaction closes on March 31, 2017 (the Sale Closing Date).
The Liquidation Analysis has been prepared assuming that the Debtors converted their cases from chapter 11 cases to chapter 7 cases on April 30, 2017, which approximates the date of the emergence (the Liquidation Date). The pro forma values referenced herein are projected to be as of April 30, 2017 and include a roll-forward amount representative of activity between January 31, 2017 and April 30, 2017, which we assume to be a reasonable proxy for the anticipated confirmation date of the Plan. The Liquidation Analysis was prepared on a legal entity basis, and summarized into the tables below.
The Liquidation Analysis represents an estimate of recovery values and percentages based upon a hypothetical liquidation of the Debtors if a Trustee were appointed by the Bankruptcy Court to convert assets into cash. The determination of the hypothetical proceeds from the liquidation of assets is a highly uncertain process involving the extensive use of estimates and assumptions which, although considered reasonable by the Debtors managing officers (Management) and the Debtors advisors, are inherently subject to significant business, economic and competitive uncertainties and contingencies beyond the control of the Debtors and Management.