Palm Energy, lender Macquarie Bank file joint plan of reorganization

By Caroline Salls

Pittsburgh, Nov. 10 - Palm Energy Partners, LLC and Macquarie Bank Ltd. filed a joint plan of reorganization and related disclosure statement for Palm's bankruptcy case, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said the main purpose of the plan is to restructure more than $155 million of Palm Energy's credit agreement obligations to Macquarie Bank.

In addition, the plan reinstates the company's obligations to its bonding companies, allowing it to honor contractual obligations to fund escrow deposits for lease-specific and area-wide bonds to secure Palm Energy's plugging and abandonment obligations going forward.

The company will also fund an additional $250,000 per month through January 2010 to the bonding companies to increase the amount of the secured escrow deposit held to collateralize the bonding obligations.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims, secured tax claims, M&M secured claims, other secured claims, royalty claims, unsecured claims and priority non-tax claims will be paid in full in cash;

• Macquarie Bank claims will be paid under the terms of an amended one-year credit agreement. Specifically, Palm Energy will make $2.5 million in principal payments per month and 50% of the interest payments from Jan. 31 to May 31, 2010, with the rest of the interest to be capitalized. The company said it would make additional principal payments each month and interest payments, with the first monthly payment to be made on June 30, 2010;

• Holders of subordinated claims will receive the treatment they would have received under the class they otherwise would have been in, except that they will not be paid until all senior classes are paid in full; and

• Holders of equity interests will retain those interests.

The plan confirmation hearing is scheduled for Dec. 16.

Palm Energy, a Metairie, La., consolidated oil and gas company, filed for bankruptcy on Sept. 1. Its Chapter 11 case number is 09-36591.

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