Cases & Deals

Nine Point Energy secures trial victory clearing path for successful reorganization through sale of its assets

Clients Nine Point Energy, LLC

Jones Day represents an oil and gas exploration and production company, Nine Point Energy, that is the Debtor in a chapter 11 bankruptcy case. At the outset, Nine Point filed a five count complaint for declaratory judgment in an adversary proceeding against a former midstream services provider, Caliber Midstream, seeking declarations that its contracts with Caliber did not contain covenants running with the land and, thus, Nine Point could reject the contracts and sell its assets free and clear of any interest that Caliber may have in the assets of the estate. On May 4—after substantial briefing and argument by a cross-practice team of Jones Day lawyers from BRR, B&TL, and Energy—the bankruptcy court granted summary judgment for Nine Point on four of the five counts in the complaint, where the court found that there were no covenants running with the land and that Nine Point can sell its assets free and clear of any of Caliber’s purported interests, obviating the need for a trial in early June and clearing the path for the sales process to move forward at a prescheduled sale hearing on June 17.

Undeterred and in an attempt to disrupt the sale process, in late May, Caliber belatedly asserted that it had senior secured liens on Nine Point's oil and gas assets totaling more $157 million under North Dakota law. Over the Memorial Day weekend, the Jones Day team prepared a second complaint for declaratory judgment along with a motion for summary judgment and a claim objection seeking a swift ruling that the claimed liens were invalid. The new adversary proceeding was filed on June 1, briefing was expedited, and the bankruptcy court agreed to hear argument at the June 17 hearing. Although Jones Day argued that the validity of the claimed liens involved questions of law, the bankruptcy court ordered the parties to engage in discovery and return one week later on June 24 to present evidence and try the issues.

Between June 17 and June 23, the Jones Day team responded to multiple rounds of written discovery, engaged in substantial document production, and took or defended multiple depositions. The case was tried on June 24 and June 25. The following Monday, the bankruptcy court issued a ruling from the bench concluding that at least $150 million of the $157 million in liens asserted by Caliber were invalid, thus, clearing the path for the successful reorganization of Nine Point through a sale of its assets.

Nine Point Energy Holdings, Inc., 1:21-bk-10570 (Bankr. D. Del.)