Restructuring FAQs

Bonanza Creek Energy, Inc. Announces Restructuring Support Agreement with Creditors Holding a Majority of its $800 Million in Unsecured Notes

Bonanza Creek (NYSE: BCEI) and certain of its subsidiaries (collectively “Bonanza Creek” or the “Company”) today announced that it has entered into a restructuring support agreement (the “Restructuring Support Agreement” or the “Agreement”) with holders of  51.1% in principal amount outstanding under the Company’s senior unsecured notes and one of its crude oil purchase and sale pipeline counterparties, NGL Crude Logistics, LLC and its parent, NGL Energy Partners, LP (collectively, “NGL”). The Agreement outlines an expected restructuring through a prepackaged plan of reorganization (the “Plan”).


FAQ Links

Investors

What was announced?
  • Bonanza Creek  entered into a Restructuring Support Agreement with a majority of its unsecured noteholders, one of its crude oil purchase and sale pipeline counterparties, NGL.
  • As part of the Agreement the Company will convert approximately $850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums into equity through a prepackaged Chapter 11 filing and will continue to operate its business in the ordinary course.
  • In addition, certain unsecured noteholders have agreed to backstop a $200 million equity rights offering.
What is a “prepackaged” chapter 11?
  • A prepackaged chapter 11 is when a company prepares a Plan of reorganization that is negotiated in principle and votes are solicited before the company actually files for bankruptcy protection. This shortens and simplifies the court process and reduces the uncertainty because of the known treatment of the Plan to its constituents.
What is chapter 11?
  • Chapter 11 refers to the section of the U.S. Bankruptcy Code that covers court-supervised restructurings of businesses. A company that files for protection under Chapter 11 is allowed to continue to operate and maintain its business “in the ordinary course” – or business as usual.
What happens during chapter 11?
  • Upon the filing of a bankruptcy case an “automatic stay” is imposed that generally prevents creditors from collecting money and debts owed by the company for activities that arose prior to the filing.
  • A major benefit of chapter 11 is that it permits daily operations to continue:
  • company facilities will stay open;
  • employees will continue to receive their regular compensation; and
  • goods and services purchased after the filing date will be paid for in the ordinary course of business.
Why did the Company negotiate an agreement before entering chapter 11?
  • The board and management believe this agreement will create the most successful outcome going forward. A prepackaged plan creates more certainty around the chapter 11 plan of reorganization process. The Company filed for chapter 11 bankruptcy protection to implement its Plan of reorganization which will create a deleveraged capital structure for its business by removing $850 million of principal, accrued interest, and prepayment premiums in respect of the senior unsecured notes and by providing $200 million of additional liquidity through a backstopped equity rights offering.  These efforts will allow the company to execute its business plan and fully realize the value of its reserves.
Is the Company going out of business?
  • No. The Company is not going out of business and operations will continue in the ordinary course. The Company has worked diligently with a majority of its noteholders to develop a prepackaged Plan to support its ongoing operations without the need for debtor-in-possession financing and to make the reorganization process as efficient and quick as possible.
Which entities are included in the filing?
  • Bonanza Creek Energy, Inc. and all of its subsidiaries.
Will there be management changes?
  • Nothing in the Agreement or the Plan calls for a change in management and there are no currently anticipated changes to the current reporting structure.
How will the restructuring process affect day-to-day operations?
  • Importantly, we will continue normal business operations during this process.
  • We believe we have ample liquidity to support the business during this process.
  • We intend to continue working closely with our suppliers and pay for goods and services delivered after the filing under normal terms. In fact, the bankruptcy court rules require us to do this.
How much debt are you reducing with this restructuring?
  • Under this Agreement, all of the Company’s senior unsecured notes ($850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums) will convert into equity.
Does the Company have adequate funding to conduct its operations during the restructuring?
  • Yes. The Company has enough working capital to operate in the ordinary course throughout the restructuring.
  • Bonanza Creek has over $80 million of cash and had not sought additional Debtor-in-Possession financing for use throughout the chapter 11 process.
How long will the Company be in chapter 11?
  • In accordance with the Agreement and Plan, the Company anticipates emerging from chapter 11 no later than the end of the first quarter 2017. The Company intends to do everything it can to move through the process efficiently and emerge as quickly as possible.
Will Bonanza’s common stock continue to be listed on the New York Stock Exchange?
  • The Company anticipates the continued listing of its common stock on the NYSE throughout the bankruptcy process so long as the Company continues to meet the minimum continued listing standards set forth by the NYSE.
Can I or should I sell my stock in Bonanza Creek?  Who should I speak to about my investment?
  • Neither the Company, nor any of its employees, advisors or representatives may provide financial advice with respect to an investment in the Company. All investors are encouraged to consult their personal financial advisor(s) after careful consideration of all the fact
Can a shareholder file a claim?
  • If you believe you are owed money for ownership of stock prior to the filing date, expected to be on or before January 5, 2017, you have the right to file a claim.
Will Bonanza Creek be a publicly listed company after it emerges from bankruptcy?
  • Under the terms of the Agreement, Bonanza Creek will remain public. As such, we will have access to capital markets to raise cash for future incremental investment (by selling newly issued shares).
What will happen to Bonanza Creek’s stock during this process?
  • The Agreement and Plan contemplate that in exchange for the releases provided by equity holders under the Plan, holders of existing equity will receive (a) 4.5% of the New Equity subject to dilution by the rights offering, management incentive Plan, and existing equity warrants, and (b) 3-year warrants (net share settlement) for up to 7.5% of the new equity at a strike price of $1.45 billion.
I have additional questions about the restructuring. How can I obtain more information?
  • The Company has set up an information line to answer questions about this announcement. The information line can be reached by calling (855) 252-4427 (toll free) or 1+(917) 258-6104 (international). Or you can email questions to: bonanzainfo@primeclerk.com
  • Court filings and other information related to the restructuring proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/bcei

Royalty Owners

What was announced?
  • Bonanza Creek  entered into a Restructuring Support Agreement with a majority of its unsecured noteholders, one of its crude oil purchase and sale pipeline counterparties, NGL.
  • As part of the Agreement the Company will convert approximately $850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums into equity through a prepackaged Chapter 11 filing and will continue to operate its business in the ordinary course.
  • In addition, certain unsecured noteholders have agreed to backstop a $200 million equity rights offering.
What is a “prepackaged” chapter 11?
  • A prepackaged chapter 11 is when a company prepares a Plan of reorganization that is negotiated in principle and votes are solicited before the company actually files for bankruptcy protection. This shortens and simplifies the court process and reduces the uncertainty because of the known treatment of the Plan to its constituents.
What is chapter 11?
  • Chapter 11 refers to the section of the U.S. Bankruptcy Code that covers court-supervised restructurings of businesses. A company that files for protection under chapter 11 is allowed to continue to operate and maintain its business “in the ordinary course” – or business as usual.
Why did the Company negotiate an agreement before entering chapter 11?
  • The board and management believe this agreement will create the most successful outcome going forward. A prepackaged plan creates more certainty around the chapter 11 plan of reorganization process. The Company filed for chapter 11 bankruptcy protection to implement its Plan of reorganization which will create a deleveraged capital structure for its business by removing $850 million of principal, accrued interest, and prepayment premiums in respect of the senior unsecured notes and by providing $200 million of additional liquidity through a backstopped equity rights offering.  These efforts will allow the company to execute its business plan and fully realize the value of its reserves.
Is the Company going out of business?
  • No. The Company is not going out of business and operations will continue in the ordinary course. The Company has worked diligently with a majority of its noteholders to develop a prepackaged Plan to support its ongoing operations without the need for debtor-in-possession financing and to make the reorganization process as efficient and quick as possible.
Which entities are included in the filing?
  • Bonanza Creek Energy, Inc. and all of its subsidiaries.
Will there be management changes?
  • Nothing in the Agreement or the Plan calls for a change in management and there are no currently anticipated changes to the current reporting structure.
How will the restructuring process affect day-to-day operations?
  • Importantly, we will continue normal business operations during this process.
  • We believe we have ample liquidity to support the business during this process.
  • We intend to continue working closely with our suppliers and pay for goods and services delivered after the filing under normal terms. In fact, the Bankruptcy Court rules require us to do this.
How much debt are you reducing with this restructuring?
  • Under this Agreement, all of the Company’s senior unsecured notes ($850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums) will convert into equity.
Does the Company have adequate funding to conduct its operations during the restructuring?
  • Yes. The Company has enough working capital to operate in the ordinary course throughout the restructuring.
  • Bonanza Creek has over $80 million of cash and had not sought additional Debtor-in-Possession financing for use throughout the chapter 11 process.
How long will the Company be in chapter 11?
  • In accordance with the Agreement and Plan, the Company anticipates emerging from chapter 11 no later than the end of the first quarter 2017. The Company intends to do everything it can to move through the process efficiently and emerge as quickly as possible.
How will Bonanza Creek royalty owners be impacted?
  • Upon entering the chapter 11 process, Bonanza Creek will petition the court to consider several “first day” motions on an expedited basis. These include the ability to continue to make payments to royalty owners when due in the ordinary course of business. We fully expect these motions to be granted and, in that event, your relationship with Bonanza Creek should continue without disruption.
Given the uncertainties of the situation, what if I want to renegotiate our terms with you?
  • We have requested permission from the court to continue to honor the existing terms of our royalty leases/contracts, including to make royalty payments according to our current terms and without interruption. It is important to understand that this is a financial restructuring and that all of our business operations will continue in the ordinary course throughout this process.
  • Your cooperation will help ensure that we can continue to work closely for many years to come.
Can I cash any royalty check I receive before or after the commencement of the bankruptcy?
  • The Company intends to file a motion with the Bankruptcy Court for approval to make royalty payments without interruption, in the ordinary course and under current terms. We expect the bankruptcy court to enter an order approving such motion and authorizing checks issued prior to or after the bankruptcy filing to be honored by banks.
  • If for any reason your check is not honored, please contact our restructuring hotline and the issue will be escalated to the company as quickly as possible
I have additional questions about the restructuring. How can I obtain more information?
  • The Company has set up an information line to answer questions about this announcement. The information line can be reached by calling (855) 252-4427 (toll free) or 1+(917) 258-6104 (international). Or you can email questions to: bonanzainfo@primeclerk.com
  • Court filings and other information related to the restructuring proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/bcei

Vendors

What was announced?
  • Bonanza Creek  entered into a Restructuring Support Agreement with a majority of its unsecured noteholders, one of its crude oil purchase and sale pipeline counterparties, NGL.
  • As part of the Agreement the Company will convert approximately $850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums into equity through a prepackaged Chapter 11 filing and will continue to operate its business in the ordinary course.
  • In addition, certain unsecured noteholders have agreed to backstop a $200 million equity rights offering.
What is a “prepackaged” chapter 11?
  • A prepackaged chapter 11 is when a company prepares a plan of reorganization that is negotiated in principle and votes are solicited before the company actually files for bankruptcy protection. This shortens and simplifies the court process and reduces the uncertainty because of the known treatment of the plan to its constituents.
What is chapter 11?
  • Chapter 11 refers to the section of the U.S. Bankruptcy Code that covers court-supervised restructurings of businesses. A company that files for protection under chapter 11 is allowed to continue to operate and maintain its business “in the ordinary course” – or business as usual.
What happens during chapter 11?
  • Upon the filing of a bankruptcy case an “automatic stay” is imposed that generally prevents creditors from collecting money and debts owed by the company for activities that arose prior to the filing.
  • A major benefit of chapter 11 is that it permits daily operations to continue:
    • company facilities will stay open;
    • employees will continue to receive their regular compensation; and
    • goods and services purchased after the filing date will be paid for in the ordinary course of business.
Why did the Company negotiate an agreement before entering chapter 11?
  • The board and management believe this agreement will create the most successful outcome going forward. A prepackaged plan creates more certainty around the chapter 11 plan of reorganization process. The Company filed for chapter 11 bankruptcy protection to implement its Plan of reorganization which will create a deleveraged capital structure for its business by removing $850 million of principal, accrued interest, and prepayment premiums in respect of the Senior Unsecured Notes and by providing $200 million of additional liquidity through a backstopped equity rights offering.  These efforts will allow the company to execute its business Plan and fully realize the value of its reserves.
Is the Company going out of business?
  • No. The Company is not going out of business and operations will continue in the ordinary course. The Company has worked diligently with a majority of its noteholders to develop a prepackaged Plan to support its ongoing operations without the need for debtor-in-possession financing and to make the reorganization process as efficient and quick as possible.
Which entities are included in the filing?
  • Bonanza Creek Energy, Inc. and all of its subsidiaries.
Will there be management changes?
  • Nothing in the Agreement or the Plan calls for a change in management and there are no currently anticipated changes to the current reporting structure.
How will the restructuring process affect day-to-day operations?
  • Importantly, we will continue normal business operations during this process. Accordingly, invoices should be submitted as usual.
  • We believe we have ample liquidity to support the business during this process.
  • We intend to continue working closely with our suppliers and pay for goods and services delivered after the filing under normal terms. In fact, the Bankruptcy Court rules require us to do this.
How much debt are you reducing with this restructuring?
  • Under this Agreement, all of the Company’s senior unsecured notes ($850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums)will convert into equity.
Does the Company have adequate funding to conduct its operations during the restructuring?
  • Yes. The Company has enough working capital to operate in the ordinary course throughout the restructuring.
  • Bonanza Creek has over $80 million of cash and had not sought additional Debtor-in-Possession financing for use throughout the chapter 11 process.
How long will the Company be in chapter 11?
  • In accordance with the Agreement and Plan, the Company anticipates to emerge from chapter 11 no later than the end of the first quarter 2017. The Company intends to do everything it can to move through the process efficiently and emerge as quickly as possible.
Will my company contact representative remain the same?
  • Your contact remains the same.
Will vendors be paid for goods and services provided before the  filing date?
  • Bonanza Creek intends to file an “all trade” motion which will request permission from the court to pay certain pre-petition vendor, supplier and contractor claims.
  • Any claims will be addressed as part of the bankruptcy court process. If, after the commencement of the chapter 11 cases, you believe you have a pre-petition claim or an administrative claim for goods and services provided to Bonanza Creek, you may need to file a proof of claim with the bankruptcy court to be eligible for payment on your claim. Information about the claims process is available at the following website: https://cases.primeclerk.com/bcei.
How do I know if my claim is considered pre-petition or post-petition? Is this decision based on the date of order, delivery or invoice?
  • Goods and services delivered prior to the date of the Company’s chapter 11 filing are considered pre-petition. Goods and services delivered on or after the filing date are considered post-petition. In making this distinction, the key factor is not the invoice date but rather the date when the goods or services were delivered to the Company.
Given the uncertainties of the situation, what if I want to renegotiate my terms with you?
  • Our business operations will continue throughout this process, and we intend to make payments to vendors under the terms of their agreements and in the ordinary course.
  • The cooperation of all of our suppliers will help ensure that we can continue to work closely for many years to come.
I have additional questions about the restructuring. How can I obtain more information?
  • The Company has set up an information line to answer questions about this announcement. The information line can be reached by calling (855) 252-4427 (toll free) or 1+(917) 258-6104 (international). Or you can email questions to: bonanzainfo@primeclerk.com
  • Court filings and other information related to the restructuring proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/bcei

Court filings and other information related to the restructuring proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/bcei or via the information call center at (855) 252-4427 (toll free) or 1+(917) 258-6104 (international).  Additional information regarding the Restructuring Support Agreement is contained in a Current Report on Form 8-K filed with the Securities and Exchange Commission on December 22, 2016.


Cautionary Note to Investors

The information and links contained herein, and elsewhere on this website, include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include statements concerning the Company’s liquidity position, ability to continue ordinary course operations throughout the duration of the proceeding, the timing of the consummation of the restructuring and the restructuring’s impact on investors, operations, employees, vendors and leaseholders. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including whether or not the Company will be successful in the restructuring; the sufficiency of the Company’s cash flow and access to liquidity and the ability of the Company to continue as a going concern; whether the bankruptcy court will approve first day motions and the Plan of reorganization as proposed, including with respect to the latter, the treatment of the claims of the senior noteholders, trade creditors and equity holders, among others; the debtors’ ability to obtain court approval with respect to motions in the Chapter 11 proceeding; court rulings in the Chapter 11 proceeding and the outcome of the Chapter 11 proceeding in general; the length of time the debtors will operate under Chapter 11, including whether the Company will be successful in exiting bankruptcy within the planned timeline; risks associated with third-party motions in the Chapter 11 proceeding, which may interfere with the consummation of the Plan of reorganization; the potential adverse effects of the Chapter 11 proceeding on the debtors’ liquidity, results of operations, or business prospects; the ability of the Company to execute its business plan; increased legal costs related to the Chapter 11 proceeding and other litigation; government and regulatory actions, potential limitations on our ability to maintain contracts and other critical business relationships; requirements for adequate liquidity to fund our operations in the future, including obtaining sufficient financing on acceptable terms; and other matters related to the potential restructuring and our indebtedness, as well as the volatility of oil and natural gas prices, our success in discovering, estimating, developing and replacing oil and natural gas reserves, actual decline curves and the actual effect of adding compression to natural gas wells, the availability and terms of capital, the ability of counterparties to transactions with us to meet their obligations, our timely execution of hedge transactions, credit conditions of global capital markets, changes in economic conditions, the amount and timing of future development costs, the availability and demand for alternative energy sources, regulatory changes, including those related to carbon dioxide and greenhouse gas emissions, and other factors, many of which are beyond our control. All of the forward-looking statements made on this web site are qualified by these cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on our Company or our business or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. We undertake no obligation to update or revise any forward