According to a SEC filing, on January 29, 2016, the amendment to the forbearance agreement dated December 18, 2015 regarding the May 1, 2014 amended credit agreement between Emerald Oil and Wells Fargo Bank, as administrative agent for a lender group, expired, and the company was determined to be in default of the credit agreement.

As a result of this default, on February 2, 2016 the Bank of Nova Scotia (BNS) notified the company that it had designated February 3, 2016 as the early termination date of the ISDA master agreement dated as of June 20, 2014, by and between the company and BNS. Thereafter, on February 3, 2016, BNS terminated the agreement and applied $17.5 million of proceeds from the termination to amounts owing by the company to BNS under the credit agreement.

As a result of the payment of the agreement termination proceeds to the credit agreement, as well as the proceeds from other transactions consummated by the company, the company has cured the borrowing base deficiency under the Facility, and the borrowing base under the facility is currently $113 million, with approximately $111 million currently outstanding. However, notwithstanding this cure of the borrowing base deficiency, the company remains in default under the facility based on the continuing covenant defaults under the credit agreement, and there is no credit available under the credit facility.

So long as one or more events of default are continuing under the credit agreement, the lenders may, subject to compliance with the terms and conditions of the credit agreement, exercise a number of remedies including acceleration of the debt and the sale of collateral. The exercise of certain remedies may have a material adverse effect on the liquidity, financial condition and results of operations of the company, and, because the company’s liquidity position continues to deteriorate, the company may still become bankrupt or insolvent.