Ruby Pipeline creditors get insight into bankruptcy dispute over company control

  • Noteholders’ lawyer questions the value of the company
  • Pipeline optimistic about financial outlook

(Reuters) – A lawyer for creditors of Houston-based Ruby Pipeline LLC on Monday questioned the company’s approach to its bankruptcy as it embarks on a Chapter 11 process with no concrete plan.

Creditors’ attorney Damian Schaible of Davis Polk & Wardwell raised concerns about the role of Ruby Pipeline owners Kinder Morgan Inc and Pembina Pipeline Corp in its restructuring process during the company’s first hearing since filing for bankruptcy in Delaware. week.

The company filed for Chapter 11 protection because it did not have enough cash to pay $475 million in unsecured notes due April 1.

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The pipeline, which stretches from Wyoming to Oregon, however, has enough cash on hand — about $113 million — to continue operating during bankruptcy. Including the unsecured notes, Ruby Pipeline has approximately $718.9 million in debt, according to court documents.

The company blamed its financial difficulties on falling natural gas prices and the subsequent decline in demand for its services.

Schaible, which represents unsecured noteholders, told U.S. Bankruptcy Judge Craig Goldblatt during Monday’s hearing that his team was concerned Kinder Morgan and Pembina were trying to retain control of the company, as well as the transfer. of what he says is hundreds of millions of dollars in cash from Ruby Pipeline to its owners in recent years. He said his team would support a plan in which unsecured creditors would take over the business in exchange for releasing the debt they hold.

Schaible also told the judge that his team thinks the equity in the pipeline might be worth less than the amount owed to noteholders, meaning the owners shouldn’t be able to retain control of the company.

Lawyers for the pipeline said they had discussions with noteholders and owners in hopes of avoiding bankruptcy, but those efforts were unsuccessful. John Knight of Richards, Layton & Finger, representing Ruby Pipeline, said at the hearing that the company does not yet know the value of its assets or whether it will pursue a sale, a stand-alone reorganization or a combination of the two.

Yet another pipeline attorney, Daniel DeFranceschi of Richards Layton, told the judge the company thought the “cash outlook was good for this business.”

Ruby Pipeline’s next hearing before Goldblatt is set for May 4.

The case is In re Ruby Pipeline LLC, US Bankruptcy Court, District of Delaware, No.22-10278.

For Ruby Pipeline: Kevin Gross, Daniel DeFranceschi, John Knight and Cory Kandestin of Richards, Layton & Finger

For ticket holders: Damian Schaible, Elliot Moskowitz, Darren Klein and Aryeh Ethan Falk of Davis Polk & Wardwell

For Kinder Morgan: Thomas Lauria, Michael Shepherd and Jason Zakia of White & Case

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