Latham & Watkins is representing two major energy producers who filed for bankruptcy protection over the last week in hopes of restructuring their businesses to prevent further losses as the nation’s sagging energy sector continues to swallow up oil and gas companies.
On Wednesday, Stone Energy Corp. filed for Chapter 11 protection in Houston, listing $1.24 billion in assets against $1.76 billion in total liabilities. The Lafayette, Louisiana-based oil and gas producer is looking to carry out a debt restructuring plan that will transfer control of the company to its bondholders.
Bankruptcy court filings show that Latham was retained in March 2016 as restructuring counsel to Stone Energy, as reports began to swirl about a potential Chapter 11 filing by the Gulf of Mexico-focused driller. Lisa Jaubert, senior vice president and general counsel at Stone Energy, previously served as an energy, finance and M&A counsel at Latham from 2011 to 2012.
In October, The Wall Street Journal reported that Stone Energy had reached a deal regarding a “prepackaged” bankruptcy plan with its creditors. Prepackaged bankruptcies, which allow would-be debtors to negotiate with creditors before filing for Chapter 11, are increasingly being used by energy companies struggling with falling oil prices and increased regulatory challenges.
Stone Energy agreed to sell its assets in the Appalachia basin in October for $360 million in cash to Fort Worth, Texas-based investment firm Tug Hill Inc. Vinson & Elkins counseled Tug Hill on the deal, while Latham took the lead for Stone Energy. The transaction, which was expected to close in February, will now require bankruptcy court approval.
Latham corporate partner Michael Dillard, who joined the firm in early 2010 ahead of its rapid expansion in Houston, is working with Chicago-based restructuring partner David Heller in advising Stone Energy. Other Latham lawyers working on the matter include restructuring partners Caroline Reckler in Chicago and Josef Athanas in Hong Kong, where he relocated earlier this year.
Houston-based Porter Hedges is also representing Stone Energy through bankruptcy partners John Higgins and Joshua Wolfshohl. Neither Porter Hedger, which like its client is also coping with a soft U.S. energy market, nor Latham have yet filed billing statements with the bankruptcy court.
Bob “B.J.” Duplantis, a senior name partner with Gordon, Arata, McCollam, Duplantis & Eagan in Lafayette, serves as an independent member of the board of directors at Stone Energy.
Just last week, Latham also assisted another energy provider in the commencement of its own prepackaged bankruptcy proceeding.
Houston-based Illinois Power Generating Co., also known as Genco, filed for bankruptcy in the city on Dec. 9. The company, which owns and operates natural gas and coal-fueled power stations across the U.S., is a subsidiary of Dynegy Inc., which once had its own twisted tale in Chapter 11.
Genco is seeking to implement a restructuring plan that will allow it to keep its operations intact while in bankruptcy court. The debtor, which has $450 million in assets against $970 million in debt, retained Latham in September 2016, according to court records.
Christopher Harris, global co-chair of Latham’s complex commercial litigation practice and leader of the firm’s East Coast insolvency litigation practice, is leading a team from the firm representing Genco that includes Reckler and fellow financial restructuring partner Kimberly Posin.
Andrews Kurth Kenyon bankruptcy and financial restructuring partner Timothy Davidson II in Houston is also advising Genco. The firm was formed in August following Andrews Kurth’s absorption of 55 lawyers from New York-based IP shop Kenyon & Kenyon, a move that bolstered the IP and technology practice of the predominantly energy and finance firm.
Genco’s outside legal advisers also have yet to file billing statements with the bankruptcy court. The American Lawyer reported last week on Chapter 11 filings by Houston-based Bennu Oil & Gas LLC and McKittrick, California-based La Paloma Generating Co. LLC, cases that have yielded roles for O’Melveny & Myers, Gardere Wynne Sewell and Curtis, Mallet-Prevost, Colt & Mosle.
More than 100 energy companies in the U.S. and Canada have filed for bankruptcy since early 2015, according to an analysis by Haynes and Boone.