In re Sabine Oil & Gas Corp.
Decision Date | 31 March 2016 |
Docket Number | Case No. 15–11835 (SCC) (Jointly Administered) |
Citation | 547 B.R. 503 |
Parties | In re: Sabine Oil & Gas Corporation, et al., Debtors. |
Court | U.S. Bankruptcy Court — Southern District of New York |
ROPES & GRAY LLP, 1211 Avenue of the Americas, New York, New York 10036 By: Mark R. Somerstein, Esq., Keith H. Wofford, Esq., D. Ross Martin, Esq., C. Thomas Brown, Esq., Counsel to the Official Committee of Unsecured Creditors
KIRKLAND & ELLIS LLP, KIRKLAND & ELLIS INTERNATIONAL LLP, 601 Lexington Avenue, New York, New York 10022 By: Jonathan S. Henes, P.C., Christopher J. Marcus, P.C., 300 North LaSalle, Chicago, Illinois 60654 By: Gabor Balassa, P.C., A. Katrine Jakola,
Esq., Whitney L. Becker, Esq., Counsel to the Debtors
BROWN RUDNICK LLP, Seven Times Square, New York, New York 10036 By: Robert J. Stark, Esq., Daniel J. Saval, Esq., Counsel to the Forest Notes Indenture Trustees
LINKLATERS LLP, 1345 Avenue of the Americas, New York, New York 10105 By: Margot B. Schonholtz, Esq., Robert H. Trust, Esq., Counsel to Wells Fargo, National Association, as First Lien Agent
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, 1285 Avenue of the Americas, New York, New York 10019 By: Moses Silverman, Esq., Brian S. Hermann, Esq., Kyle J. Kimpler, Esq., Counsel to Wilmington Trust, N.A. as Second Lien Agent
QUINN EMANUEL URQUHART & SULLIVAN, LLP, 51 Madison Avenue, 22nd Floor, New York, New York 10010 By: Andrew J. Rossman, Esq., Susheel Kirpalani, Esq., Julia M. Beskin, Esq., Counsel to FRC Founders Corporation, Sabine Investor Holdings LLC, First Reserve Fund XI, L.P., First Reserve GP XI, L.P., First Reserve GP XI, Inc., Alex Krueger, Brooks Shughart, Michael France, and Joshua Weiner
SHEARMAN & STERLING LLP, 599 Lexington Avenue, New York, New York 10022 By: Joseph J. Frank, Esq., Fredric Sosnick, Esq., Counsel to Barclays Bank PLC and Barclays Capital Inc.
KASOWITZ, BENSON, TORRES & FRIEDMAN LLP, 1633 Broadway, New York, N.Y. 10019 By: Kenneth R. David, Esq., Daniel A. Fliman, Esq., Counsel to Richard J. Carty, Loren Carroll, Dod Fraser, James Lee, James Lightner, Patrick R. McDonald, Raymond Wilcox, and Victor Wind
AKIN, GUMP, STRAUSS, HAUER & FELD LLP, One Bryant Park, New York, New York 10036 By: Daniel H. Golden, Esq., Philip C. Dublin, Esq., Sara L. Brauner, Esq., EMMET, MARVIN & MARTIN, LLP, 120 Broadway, 32nd Floor, New York, New York 10271 By: Edward P. Zujkowski, Esq., Thomas A. Pitta, Esq., Co-counsel to The Bank of New York Mellon Trust Company, N.A. as Trustee under the 2017 Notes Indenture
CURTIS, MALLET–PREVOST, COLT & MOSLE, LLP, 101 Park Avenue, New York, New York 10178 By: Steven J. Reisman, Esq., Theresa A. Foudy, Esq., Counsel to Sabine Directors Duane Radtke, David Sambrooks, and John Yearwood
BENCH DECISION ON MOTIONS FOR LEAVE, STANDING, AND AUTHORITY TO COMMENCE AND PROSECUTE CERTAIN CLAIMS AND CAUSES OF ACTION ON BEHALF OF THE DEBTORS' ESTATES2
Before the Court are the (i) Motion of the Official Committee of Unsecured Creditors for (I) Leave, Standing, and Authority to Commence and Prosecute Certain Claims and Causes of Action on Behalf of the Debtors' Estates and (II) Non–Exclusive Settlement Authority, dated November 17, 2015 [ECF No. 518] (the "First Committee STN Motion"); (ii) Motion of the Forest Notes Indenture Trustees for Entry of an Order Pursuant to § 1109(b) Granting Leave, Standing and Authority to Prosecute and, if Appropriate, Settle Certain Claims on Behalf of the Estate of Sabine Oil & Gas Corporation, dated November 17, 2015 [ECF No. 521] (the "Forest Notes Indenture Trustees' STN Motion"); and (iii) Second Motion of the Official Committee of Unsecured Creditors for (I) Leave, Standing, and Authority to Commence and Prosecute Certain Claims and Causes of Action on Behalf of the Debtors' Estates and (II) Non–Exclusive Settlement Authority, dated December 15, 2015 [ECF No. 609] ( ). The Official Committee of Unsecured Creditors (the "Committee") and the indenture trustees for the Legacy Forest Notes (as defined herein) (the "Forest Notes Indenture Trustees") shall be referred to herein collectively as the "Movants."
Throughout these cases, the parties have grouped the claims that are the subject of the STN Motions into three categories. First, the First Committee STN Motion and the Forest Notes Indenture Trustees' STN Motion each seeks standing to pursue constructive fraudulent conveyance claims against the Debtors' current and former secured lenders arising from the December 2014 merger between Forest Oil Corporation ("Legacy Forest") and Sabine Oil & Gas LLC ("Legacy Sabine Parent") and related financing transactions (collectively, and with the merger, the "Combination").3 Specifically, these claims (the "Constructive Fraudulent Transfer Claims") seek, on behalf of (i) the Legacy Forest estate and (ii) the estates of the subsidiaries of Legacy Sabine Parent (the "Legacy Sabine Subsidiaries"), to avoid obligations incurred, liens transferred, and payments made in connection with or related to the Combination.
Second, the Second Committee STN Motion seeks standing to pursue claims for (i) intentional fraudulent transfers related to the Combination; (ii) breaches of fiduciary duty against (a) the pre-Combination Legacy Forest directors and officers (the "Legacy Forest Directors and Officers"); (b) the Legacy Sabine Parent board of directors; (c) Mr. David J. Sambrooks, as fiduciary for the Legacy Sabine Subsidiaries; and (d) the members of the board of directors of the Combined Company who replaced the Legacy Forest board of directors at or around 1:20 p.m. EST on December 16, 2014 and met for the first time at 3:30 p.m. EST on December 16, 2014 (the "3:30 Board"); (iii) aiding and abetting breaches of fiduciary duty against the New RBL Lenders,4 the Second Lien Lenders,5 the Legacy Forest Directors and Officers, and the First Reserve Defendants (as defined below); (iv) equitable subordination of the claims of the New RBL Lenders and the Second Lien Lenders; and (v) recharacterization as equity of the $50 million borrowed from the Second Lien Lenders by the Combined Company in connection with the Combination (collectively, the "Bad Acts Claims").
Finally, the First Committee STN Motion seeks standing to pursue certain claims unrelated to the Combination, including, among others, claims challenging certain liens as beyond the scope of the grant or as avoidable preferences (the "Bucket II Claims").6 The Bank of New York Mellon Trust Company, N.A. (the "Legacy Sabine Notes Trustee"), as indenture trustee for the $350 million outstanding in 9.75% senior unsecured notes due 2017 (the "Legacy Sabine Notes"), has joined each of the STN Motions.7 The Forest Notes Indenture Trustees joined the Second Committee STN Motion8 and later amended the Forest Notes Indenture Trustees' STN Motion to allow the Committee to seek a "lead" position with respect to the Constructive Fraudulent Transfer Claims.9 Accordingly, the Legacy Sabine Notes Trustee and the Forest Notes Indenture Trustees join the Committee as Movants in this proceeding.
Objections to one or all of the STN Motions were filed by the following parties, which the Court will refer to collectively as the "Objectors": (i) Wells Fargo, in its capacity as New RBL Agent;10 (ii) Barclays Bank PLC and Barclays Capital Inc.;11 (iii) the Second Lien Agent;12 (iv) the Debtors;13 (v) the Ad Hoc Committee of Former Forest Employees;14 (vi) FRC Founders Corporation, Sabine Investor Holdings LLC, First Reserve Fund XI, L.P., First Reserve GP XI, L.P., First Reserve GP XI, Inc., Michael G. France, Alex T. Krueger, Brooks M. Shughart, and Joshua Weiner (collectively, the "First Reserve Defendants");15 (vii) Sabine directors Duane Radtke, David J. Sambrooks, and John Yearwood;16 and (viii) Legacy Forest Directors and Officers Victor A. Wind, Loren K. Carroll, Richard J. Carty, Dod A. Fraser, James H. Lee, James D. Lightner, Patrick R. McDonald, and Raymond I. Wilcox.17 On February 1, 2016, the Committee filed an omnibus reply to the objections to the STN Motions,18 which reply was joined by the Legacy Sabine Notes Trustee.19
The Committee seeks to obtain derivative standing to prosecute the STN Motions pursuant to the holding in Unsecured Creditors Comm. of Debtor STN Enters. Inc. v. Noyes (In re STN Enterprises), 779 F.2d 901 (2d Cir.1985)( "STN ")....
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