The wait for downtown oil partnership Breitburn Energy Partners to emerge from bankruptcy is poised to get longer.
The company submitted a motion last week to U.S. Bankruptcy Court Judge Stuart Bernstein in New York to extend the deadline to file its reorganization plan 60 days to May 12, almost one year to the day after the company filed for bankruptcy protection. The filing states that Breitburn needs more time to negotiate terms of the plan with creditors and other stakeholders.
The company is also seeking a 60-day extension to July 11 of a deadline by which it must win support for its reorganization plan from creditors.
Bernstein scheduled a March 8 hearing to consider the extension requests, according to Stephen Karotkin, one of Breitburn’s bankruptcy attorneys with New York law firm Weil Gotshal & Manges.
At that same hearing, Bernstein is also expected to rule on whether key Breitburn employees, including its four top executives, would receive another round of performance bonuses.
In the fall, Bernstein approved $9.5 million in bonuses to the four executives, including $4 million to Chief Executive Halbert Washburn. That came after the company’s lawyers worked out a settlement with the creditors’ committee to reduce the maximum payouts by 10 percent from an original request for $10.7 million.
Earlier this month, the company submitted a request to the court for performance bonus payouts for 2017 totaling up to $20 million for 570 employees, according to the filing. Of that, up to $9.65 million would go to the top four executives, including up to $4.2 million for Washburn. With the creditors’ committee agreeing to a virtually identical amount in the fall, it is expected that Bernstein would approve this round.
Breitburn filed for bankruptcy protection in May after failing to reach a deal for a cash infusion from creditors, reporting $4.7 billion in assets and $3.4 billion in debt at the time. The oil and gas exploration company had been hit hard by the 2014-15 collapse of oil prices.
In an unusual step, Bernstein in the fall approved the formation of a shareholders’ equity committee. Investors had successfully petitioned for the panel, citing the potential of catastrophic tax losses if Breitburn’s debts are canceled through the bankruptcy process.
Because Breitburn is a master limited partnership, shareholders pay tax on income the company receives, and in the bankruptcy process, canceled debts are considered income. So shareholders holding nearly worthless shares could face tax bills in the tens of thousands of dollars.