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New York Law Journal: Rejection of Gathering Agreements in Chapter 11

April 27, 2020

O’Melveny partners John Rapisardi and Joe Zujkowski co-authored this bylined article discussing “two bankruptcy courts issued opinions in favor of midstream operators that either distinguish or expressly disagree with the Second Circuit’s findings in the 'Sabine'” and providing “a checklist of key questions investors should consider in determining the likelihood that an upstream operator will be able to shed covenants made to a midstream operator if the upstream operator commences a Chapter 11 case.”

“Given the current state of oil and gas markets and the number of U.S. “upstream” operators that may need to restructure this year, investors in this sector should be aware of a number of recent cases addressing the ability of upstream operators to shed covenants made to midstream operators as part of a Chapter 11 restructuring. Recently, two bankruptcy courts (the U.S. Bankruptcy Court for the Southern District of Texas in Alta Mesa and the U.S. Bankruptcy Court for the District of Colorado in Badlands) issued opinions in favor of midstream operators that either distinguish or expressly disagree with the findings of the U.S. Court of Appeals for the Second Circuit’s opinion in the Sabine,” the authors wrote.

New York Law Journal subscribers can access the full article here.