Item 1.01 Entry Into Material Definitive Agreement.
Second Amendment to DIP Credit Agreement
As previously disclosed, on June 28, 2020, Lilis Energy, Inc., a Nevada
corporation (the "Company"), and its consolidated subsidiaries Brushy Resources,
Inc., ImPetro Operating LLC, ImPetro Resources, LLC, Lilis Operating Company,
LLC and Hurricane Resources LLC (collectively, the "Filing Subsidiaries") filed
voluntary petitions seeking relief under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the Southern District of Texas, Houston Division (the "Bankruptcy Court")
commencing cases for relief under Chapter 11 of the Bankruptcy Code (the
"Chapter 11 Cases"). In connection with the Chapter 11 Cases, on June 30, 2020,
the Company entered into that certain Senior Secured Super-Priority
Debtor-in-Possession Credit Agreement (as amended, the "DIP Credit Agreement")
with the Filing Subsidiaries, as guarantors, BMO Harris Bank N.A., as
administrative agent (the "Administrative Agent"), and the lenders party thereto
(the "Lenders").
On August 21, 2020, the Company, the Filing Subsidiaries, the Administrative
Agent and the Lenders entered into a Second Amendment (the "Second Amendment")
to the DIP Credit Agreement. The Second Amendment, among other things, amends
the covenant therein with respect to the satisfaction of certain milestones
during the course of the Chapter 11 Cases, by extending the date of certain of
such milestones, including milestones relating to the date by which an auction
of the Debtors' assets must occur and the date by which any such resulting sale
of the Debtors' assets must close, in each case subject to receiving one or more
qualifying bids from potential buyers.
The foregoing description of the Second Amendment does not purport to be
complete and is qualified in its entirety by reference to the full text of the
First Amendment, which is filed as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated herein by reference.
Mutual Termination of Restructuring Support Agreement
As previously disclosed and in connection with the Chapter 11 Cases, on June 28,
2020, the Company and the Filing Subsidiaries (the "Debtors") entered into a
Restructuring Support Agreement ("RSA") with (i) the lenders under the Company's
revolving credit facility (other than Värde (as defined below)) (the "Consenting
RBL Lenders") and (ii) certain investment funds and entities affiliated with
Värde Partners, Inc. (collectively, "Värde"). The RSA contemplates that the
Debtors, the Consenting RBL Lenders and Värde may mutually terminate the RSA.
The RSA contemplated a dual-track path in the Chapter 11 Cases whereby the
Debtors would simultaneously pursue a chapter 11 plan sponsored by a new money
investment from Värde while also preparing for a potential sales process if a
chapter 11 plan sponsored by Värde could not be achieved by fifty (50) days
after the commencement of the Chapter 11 Cases. On August 17, 2020, the Company
announced that Värde had declined to pursue a new money investment in the
company to sponsor a chapter 11 plan of reorganization. Accordingly, the Debtors
immediately switched their focus to the pursuit of a process to sell
substantially all of their assets.
Because of these developments, on August 21, 2020, the Debtors, the Consenting
RBL Lenders and Värde entered into a Mutual Termination of the RSA (the "Mutual
Termination"). The Mutual Termination, among other things, terminates the RSA
but preserves certain provisions of the RSA that are intended to survive a
mutual termination, including provisions regarding the commitments and
obligations of the parties related to the approval of bidding procedures and
pursuit of sale of substantially all the Debtors' assets.
The foregoing description of the Mutual Termination does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Mutual Termination, which is filed as Exhibit 10.2 to this Current Report on
Form 8-K and is incorporated herein by reference.
Item 1.03Bankruptcy or Receivership.
In connection with pursuing a process to sell all or substantially all of their
assets through the Chapter 11 Cases, which may be pursuant to Section 363 of the
Bankruptcy Code or a chapter 11 plan of reorganization, on July 13, 2020, the
Debtors filed a motion with the Bankruptcy Court (the "Bidding Procedures
Motion") seeking approval of certain bidding procedures in connection with any
potential sales of all or substantially all of the Debtors' assets.
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On August 21, 2020, the Bankruptcy Court entered an order approving bidding
procedures for any sales of the Debtors' assets (the "Bidding Procedures
Order"), which was supported by the RBL Lenders, Värde and the official
committee of unsecured creditors appointed in the Chapter 11 Cases.
Information regarding the Chapter 11 Cases, including the Bidding Procedures
Motion and the Bidding Procedures Order, is available for free on the website
maintained by Stretto, located as https://cases.stretto.com/LilisEnergy or by
calling (855) 364-4639 (Toll-Free) or (949) 266-6357 (Local).
Item 9.01 Exhibits.
(d) Exhibits.
Exhibit Number Description
Second Amendment to Senior Secured Super-Priority
Debtor-in-Possession Credit Agreement dated as of August 21, 2020,
among Lilis Energy Inc., the guarantors party thereto, BMO Harris
10.1 Bank N.A., as administrative agent, and the lenders party thereto.
Mutual Termination of the Restructuring Support Agreement dated as
of August 21, 2020, among Lilis Energy, Inc., certain of its
subsidiaries, the lenders party thereto, and certain funds
10.2 affiliated with Värde Partners, Inc.
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