(Repeats to widen distribution)
By Jessica DiNapoli
NEW YORK Oct 14 Equity investors in Breitburn
Energy Partners LP can receive representation on an
official committee, a U.S. bankruptcy court said on Friday,
giving investors in the bankrupt oil and gas company a voice in
Breitburn, based in Los Angeles, filed for Chapter 11
bankruptcy in May, one of more than 100 energy companies that
have sought court protection from creditors in the worst energy
price crash in a generation.
The public unit holders of the master limited partnership
began fighting for an official place in court soon after, saying
they could end up owing taxes if the company canceled some of
its roughly $3.1 billion in debt in a reorganization.
Equity holders must convince judges that they stand to
recover money when arguing for an official committee, which
would advocate for equity recovery.
Bankruptcy judges rarely approve such committees. But as oil
prices have rebounded to about $50 per barrel from lows of $26
per barrel earlier this year, they have allowed their creation
in energy bankruptcy cases including Energy XXI Ltd
and Hercules Offshore Inc.
"(The) court concludes that ... equity has carried its
burden that Breitburn does not appear to be hopelessly
insolvent," bankruptcy Judge Stuart Bernstein of the Southern
District of New York said.
Bernstein said the committee should focus on Breitburn's
plan of reorganization, which has not been filed, and its
solvency. The committee should also look into the potential tax
hit the equity holders face, he said.
Stephen Karotkin and Ray Schrock, attorneys for Breitburn,
told Bernstein that the tax issue was foremost for the company,
and that its reorganization plan would aim to mitigate its
Attorneys pushing for the formation of the committee had
argued that Breitburn was able to raise $350 million in
convertible preferred units in early 2015, when oil was trading
at roughly the same level as today, a sign that the company is
not now "hopelessly insolvent."
(Reporting by Jessica DiNapoli; Editing by Carmel Crimmins and