Ankura will act as financial advisor and assume the role of chief restructuring officer for Yuma Energy, which filed voluntary Chapter 11 petitions for relief under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas.
During Q1/20, Yuma’s cash position deteriorated and now its cash flow from operations is no longer sufficient to cover its operating costs. The company plans to continue to operate its business in the normal course during the court-supervised bankruptcy process.
Yuma intends to use the Chapter 11 process to implement the orderly liquidation of its assets in an effort to maximize values and recoveries to stakeholders. The company intends to seek immediate court approval to conduct an auction for substantially all of its assets, which primarily consist of operating and non-operating interests in several properties in Louisiana, Texas, Wyoming and Oklahoma. The auction is expected to occur within the first 90 days of the bankruptcy filings.
Yuma may negotiate to obtain a new debtor-in-possession financing to provide working capital to support normal operations and the sale of assets during the Chapter 11 process. However, it is not certain that these negotiations to obtain DIP financing will be successfully completed.
Separately, Anthony C. Schnur resigned from his positions as interim CEO, interim CFO and chief restructuring officer of Yuma Energy. Schnur was recently hired by Ankura and will oversee the operation of Yuma during the bankruptcy process as he provides his services to the company through Ankura.
“In 2019 and early 2020, we took proactive steps to recapitalize our company’s financial structure under a credit agreement with our lender YE Investment (YE) and a restructuring and exchange agreement (the restructuring agreement) with Red Mountain Capital Partners LLC (Red Mountain) and certain of its affiliates including YE,” Schnur said. “Unfortunately, YE recently notified us that it was terminating the credit agreement due to the company’s failures to make timely interest payments and to comply with other covenants, and further, that it was also accelerating all payments due under the credit agreement so that all outstanding principal, accrued interest, fees and other obligations under the credit agreement became immediately due and payable. Simultaneous with the termination of the credit agreement, Red Mountain notified us that it was terminating the restructuring agreement.
“Our revenues and cash position have eroded to the point of unsustainability primarily driven by the severe downturn in oil prices. After much consideration, the company’s board of directors came to the decision that the use of the Chapter 11 liquidation process was the best path forward to maximize values and recoveries. Although I am stepping down from my executive positions at the company, I intend to actively oversee this restructuring process. Also, I want to express my sincere gratitude to the employees for their continued dedication and hard work during this time.”
Seaport Gordian Energy, an affiliate of Seaport Global Holdings, was engaged as the investment banker for Yuma, and FisherBroyles will serve as legal advisors to the company.
Yuma Energy is a Houston-based exploration and production company focused on acquiring, developing and exploring for oil and natural gas resources.
