Palm Energy Partners, subsidiary file for Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Sept. 3 - Palm Energy Partners, LLC and its Pisces Energy, LLC subsidiary filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas.

According to a statement filed by the companies' operating manager, William M. Gray, Pisces' principal assets consist of 47 offshore leasehold and royalty interests in oil and gas properties, along with related and accompanying rights that it acquired from El Paso E&P Co. LP in March 2008 for $235 million.

Gray said Pisces financed its acquisition from a $210 million loan from Macquarie Bank Ltd., but the Palm Energy subsidiary said the lender violated the credit agreement by "delaying active pursuit of syndication participants" after the closing date.

Had Macquarie syndicated the loan, Gray said Pisces believes the interest rate on the loan and the terms of repayment would have been reduced and extended substantially.

"Pisces contends the onerous terms of the credit agreement made operations and access to cash difficult for Pisces," Gray said in the filing.

Gray said Pisces also believes the failed syndication infringed on its ability to fully develop properties and to otherwise provide the liquidity and cash availability to exploit developing opportunities elsewhere.

In addition, Gray said the 2008 hurricanes in the Gulf of Mexico disrupted operations and caused pipelines to be shut down, with some impact on Pisces operations.

Palm Energy's principal assets are its membership interests in Pisces and two non-debtor subsidiaries.

In connection with the filing, the company has requested court approval to use the cash collateral of its pre-bankruptcy lenders to fund its operations while in bankruptcy.

According to court documents, Palm Energy had $100 million to $500 million in both assets and debt.

The company's largest unsecured creditors include Indem Co. of Houston, with a $35 million bond claim and Global Industries Offshore LLC of Dallas, with a $2.56 million trade payable claim.

Palm Energy is a Metairie, La., consolidated oil and gas company. Its Chapter 11 case number is 09-36591.

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