Burro Sand’s disclosure statement draws objection from committee

By Sarah Lizee

Olympia, Wash., Dec. 4 – Aequor Mgt LLC’s (Burro Sand) disclosure statement for its Chapter 11 plan of liquidation drew an objection from the official committee of unsecured creditors, according to documents filed Monday with the U.S. Bankruptcy Court for the Eastern District of Texas.

The committee said the debtors’ disclosure statement fails to adequately disclose or explain the contents of the plan.

In particular, the disclosure statement fails to disclose the value of estate assets, including avoidance actions and insider and intercompany claims, the committee said.

The disclosure statement also does not provide an adequate liquidation analysis to show that the proposed plan, which provides essentially no recovery to unsecured creditors and includes releases of claims, would provide the same or better recovery to unsecured creditors than they would receive in a Chapter 7 liquidation, the committee added.

“This is a crucial issue as the committee and other creditors weigh the benefits of conversion and pursuit of litigation claims, instead of a Chapter 11 plan that provides little to no recovery,” the group said in the objection.

“With respect to the released claims, the debtors have not provided a justification for releasing potentially valuable claims in exchange for a miniscule or non-existent recovery to unsecured creditors.”

The committee also said the disclosure statement does not seek to justify the allocation of settlement payments between the debtors.

The allocation included in the disclosure statement is also inconsistent with the allocation included in the plan, the committee said.

“Without a clear rationale for the allocation, or what the correct allocation is, unsecured creditors cannot adequately assess whether to support the plan or not,” the committee stated.

The disclosure statement hearing is scheduled for Dec. 13.

Tyler, Tex.-based Burro Sand is a frac sand mining and processing plant. The company filed bankruptcy on Jan. 5, 2023 under Chapter 11 case number 23-60010.

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