How courts will rule in oil and gas bankruptcy cases has entered a new era of uncertainty. In this Hart Energy article, bankruptcy partner Elizabeth Freeman noted, “I think there are some people that had the belief that, since ‘Sabine,’ ‘Badlands’ and ‘Alta Mesa’ came out, that issue is settled. That’s not it at all. What we have are guidelines.”

For E&P companies that may seek to reject its midstream agreements based on covenants running with the land, Liz said, “You don’t see the exact same dedication language in every single agreement. You really have to take a look at each one and do a very fact-intensive analysis as opposed to just knowing that you could have a processing agreement, it has covenants, therefore it’s rejectable or it is not. I think there is going to be a lot of litigation over individual agreements.”

For more information, read the Hart Energy article “E&P Bankruptcies Move in ‘Very Hairy’ Direction” (subscription required) and the Jackson Walker article “Lamar Opinion Reminds Creditors to Get in Writing Any Representations About Debtors’ Financial Conditions.”

Meet Liz

Bankruptcy partner Elizabeth Carol Freeman has over 20 years of experience with out-of-court workouts and complex bankruptcy and reorganization matters. Liz assists clients with workouts of distressed loans, including the negotiation of amend and extend agreements. Prior to joining Jackson Walker, she served for six years as law clerk to the Chief Bankruptcy Judge for the United States Bankruptcy Court for the Southern District of Texas. Liz is Board Certified in Business Bankruptcy Law by the Texas Board of Legal Specialization. She holds memberships with the State Bar of Texas, Houston Bar Association, American Bankruptcy Institute, and American Inns of Court.