Article
Source: Energy Law Report
Article
03.09.21
In the March 2021 Edition of Energy Law Report, Pillsbury Insolvency & Restructuring partners Hugh McDonald, Hugh Ray, III and associate Kwame Akuffo explain that recent decisions have deepened the split among bankruptcy courts on whether midstream gathering agreements may be rejected as executory contracts or whether the assets in the underlying agreements could be sold free and clear without the covenants.
The surge in bankruptcy filings by upstream companies caused by the global pandemic, volatile energy prices, and weak economic activity has resulted in numerous litigations in bankruptcy courts over the ability of an upstream company to reject agreements with midstream counterparties. The focus of the litigation has been whether such agreements contain covenants running with the land and, if so, are such agreements subject to rejection under the Bankruptcy Code or property interests that cannot be extinguished through a bankruptcy proceeding.
Read more here.