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Bennu Oil & Gas Subsidiary: Involuntary bankruptcy and Trustee request.

  • September 19, 2016:  According to Dow Jones: ” Beal Bank USA, which last month launched an involuntary chapter 11 proceeding against an affiliate of Bennu Oil & Gas LLC, is asking a bankruptcy judge to approve an independent trustee to take control of the affiliate.
  • In an emergency request filed Thursday with the U.S. Bankruptcy Court in Wilmington, Del., lawyers for Beal Bank said the affiliate, Bennu Titan LLC, is at risk of becoming “functionally incapacitated” and needs a trustee to preserve its operations and to ensure it complies with health and safety standards.
  • Bennu Titan owns an offshore-drilling platform in the Gulf of Mexico that is being used by its parent, Bennu Oil & Gas…
  • Of seven Bennu Titan managers, four have resigned recently, and three plan to resign soon, court papers show.
  • Beal said Bennu Titan’s board has been “dominated” by individuals who also serve on the board of managers of Bennu Oil & Gas, and the two companies are also advised by the same lawyers.
  • “The conflict is clear and debilitating,” Beal’s lawyers said in court papers.
  • The bank said Bennu Titan needs an outsider to navigate a bankruptcy and to oversee possible distributions to creditors, namely Beal Bank. A bankruptcy-court hearing on the matter is scheduled for Sept. 21.
  • beal-bank
  • Last month, Beal Bank sought to force Bennu Titan LLC into bankruptcy, saying the oil and gas explorer is past due on $180 million in debt. Bennu has yet to formally respond.
  • Typically, involuntary bankruptcies require at least three creditors to sign on, but for companies with fewer than 12 creditors, it takes just one to start the proceeding. Beal Bank was joined on the involuntary petition by one of its affiliates, commercial lender CLMG Corp.
  • Dallas-based Beal Bank was founded by Mr. Beal, a billionaire who is ranked No. 115 on this year’s Forbes magazine list of the wealthiest people in the world. Beal Bank said it is owed $180.4 million stemming from a $350 million term loan it made to Bennu Titan in 2010.
  • Drilling
  • Houston-based Bennu Oil & Gas was formed in 2013 to acquire infrastructure and other drilling assets from ATP Oil & Gas, which liquidated in bankruptcy after its operations were disrupted by the Deepwater Horizon oil spill disaster. Bennu Titan was formerly ATP Titan LLC, court papers show.”
  • BDC exposure to Bennu Titan is unknown. However, exposure to Bennu Oil & Gas is Major at $59mn.
  • Three BDCs have investments in Bennu Oil & Gas: OHA Investment (OHAI), PennantPark Investment (PNNT) and Sierra Income, a non-traded BDC.
  • All exposure appears to be in Second Lien debt, according to Advantage Data records, and was written down by 42% to 69% as of June 2016.
  • The debt appears to be on non-accrual.
  • BDC Credit Reporter adds: “Additional facts are scarce. We are playing catch up with the story and will update shortly.
  • This is our first Alert on Bennu Oil & Has.