Restructuring / Bankruptcy Sale

Lilis Energy Files for Chapter 11 Bankruptcy Protection

By Deepak Sharma
June 29, 2020
2 minutes read
Oil Pumpjacks

Lilis Energy Inc. has filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas. Bankruptcy petitions were filed under a Restructuring Support Agreement (RSA) signed between the company and many of its creditors and equity holders, including certain investment funds and entities affiliated with Värde Partners Inc.

Fort Worth-based Lilis Energy is focused on oil exploration and development operations exclusively in the Permian basin, and currently owns acreage located across Loving and Winkler Counties in Texas, with additional acreage in Lea County, New Mexico.

Under the terms of the RSA, the company has received a commitment from its existing lenders under the Reserve-Based Lending (RBL) credit agreement to provide up to US$15 million in Debtor-In-Possession (DIP) financing and US$55 million in Exit RBL financing. Up to US$5 million under the DIP facility will be made available to Lilis Energy on an interim basis.

Upon completion, the common shares of the company will be canceled for no consideration, and its funded debt obligations will be reduced by more than US$34.9 million. The plan must be approved by the bankruptcy court, Lilis Energy said in a statement.

The RSA is contingent on Värde Partners committing to acquire all the outstanding common shares of Lilis Energy for a cash consideration of US$55 million and providing an additional DIP financing of US$20 million. If Värde Partners decides not to provide the funding by August 17th, 2020, or if the restructuring plan is not concluded, the company will pursue the sale of all of its assets via bidding procedures.

“While facing this challenging environment, we have worked diligently to explore a variety of alternatives to cut costs, improve our liquidity and address debt maturities,” said Joseph C. Daches, Lilis’ CEO, President and CFO. “We are pleased to receive the continued support of our lenders and preferred shareholders and are confident that Lilis Energy can emerge from Chapter 11 better positioned to meet the challenges that have faced us,” he added.

Opportune is serving as the restructuring advisor, while Vinson & Elkins LLP is acting as legal counsel to Lilis Energy. Barclays Capital is also acting as a financial advisor to the company.

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