SANCHEZ ENERGY CORP Item 1.03. Bankruptcy or Receivership.
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The Debtors expect that the effective date (the "Effective Date") of the Plan will occur as soon as all conditions precedent to the Plan have been satisfied. Although the Debtors are targeting occurrence of the Effective Date as soon as reasonably practicable, the Debtors can make no assurances as to when, or ultimately if, the Plan will become effective. It is also possible that technical amendments could be made to the Plan and the Plan Supplement (as defined in the Plan) prior to the Effective Date.
The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. This summary is qualified in its entirety by reference to the full text of the Plan and the Confirmation Order, which are attached hereto as Exhibits 2.1 and 99.1, respectively, and incorporated by reference herein.
The Plan of Reorganization and Treatment of Claims and Interests
The Plan contemplates the following treatment of claims against and interests in the Debtors:
· Class 1 - Other Secured Claims: holders of secured claims, other than DIP
Claims (as defined in the Plan) and Secured Notes Claims (as defined below), will receive, at the option of the applicable Debtor, (i) payment in full in cash, (ii) delivery of the collateral securing any such secured claim and payment of any interest required under section 506(b) of the Bankruptcy Code, (iii) reinstatement of such secured claim, or (iv) other treatment rendering such secured claim unimpaired;
· Class 2 - Other Priority Claims: holders of claims entitled to priority in
right of payment under section 507(a) of the Bankruptcy Code, to the extent such Claim has not already been paid during the Chapter 11 Cases, other than an Administrative Claim (as defined in the Plan) or a Priority Tax Claim (as defined in the Plan), will receive (i) cash in an amount equal to such claim or (ii) other treatment rendering such claim unimpaired;
· Class 3 - DIP Claims: holders of DIP Claims (other than DIP Fee Claims (as
defined in the Plan)) will receive their pro rata share of (i) 20% of the new
common stock (the "New Common Stock") in the reorganized Company ("Reorganized
Sanchez"), and (ii) the remaining 80% of the New Common Stock (such remaining
80%, the "Post-Effective Date New Common Stock") to the extent not allocated to
holders of claims in Class 4 and/or 5 described below, based on the outcome of
the Lien-Related Litigation (as defined in the Plan);
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· Class 4 - Secured Notes Claims: holders of secured claims in connection with
the Company's 7.25% Senior Secured First Lien Notes due 2023 or the Final DIP Order (as defined in the Plan) (collectively, the "Secured Notes Claims") (other than DIP Fee Claims) will receive their pro rata share of the Post-Effective Date New Common Stock, if any, allocated to the Secured Notes Claims based on the outcome of the Lien-Related Litigation;
· Class 5 - General Unsecured Claims: holders of claims arising from general
unsecured obligations against the Debtors will receive their pro rata share of the Post-Effective Date New Common Stock, if any, allocated to such holders based on the outcome of the Lien-Related Litigation;
· Class 6 - Intercompany Claims: claims held by a Debtor against another Debtor
will be, at the election of the Debtors, (i) reinstated, (ii) compromised, (iii) released, or (iv) offset, contributed, and/or distributed to the applicable Debtor;
· Class 7 - Intercompany Interests: interests in a Debtor other than the Company
will receive no recovery or distributions and be reinstated or contributed to the applicable Debtor solely to maintain the Debtors' corporate structure;
· Class 8 - Existing Company Preferred Interests: holders of the Company's
existing (i) 4.875% Convertible Perpetual Preferred Stock, Series A, with a par value of$0.01 per share (the "Existing Series A Preferred Stock"), and (ii) 6.500% Convertible Perpetual Preferred Stock, Series B, with a par value of$0.01 per share (the "Existing Series B Preferred Stock," and together with the Existing Series A Preferred Stock, the "Existing Preferred Stock"), will not receive any distribution on account of such interests, which will be canceled, released, and extinguished as of the Effective Date, and will be of no further force or effect;
· Class 9 - Existing Company Common Interests: holders of the Company's existing
common stock (the "Existing Common Stock") will not receive any distribution on account of such interests, which will be canceled, released, and extinguished as of the Effective Date, and will be of no further force or effect; and
· Class 10 - Section 510(b) Claims: holders of claims subject to subordination
under section 510(b) of the Bankruptcy Code will not receive any distribution on account of such claims, which will be canceled, released, and extinguished as of the Effective Date, and will be of no further force or effect.
Unless otherwise specified, the treatment set forth in the Plan and the Confirmation Order will be in full satisfaction of all claims against and interests in the Debtors, which will be discharged on the later of the Effective Date and the date such claim or interest becomes an allowed claim or allowed interest or as soon as reasonably practicable thereafter.
Additional information regarding the classification and treatment of claims and interests can be found in Article III of the Plan.
Capital Structure
The Existing Common Stock and Existing Preferred Stock outstanding prior to the Effective Date will be canceled, in each case, as provided in the Plan. As of the date of the Confirmation Order, there were 102,331,639 shares of the Existing Common Stock issued and outstanding, 436,352 shares of the Existing Series A Preferred Stock issued and outstanding and 1,635,296 shares of the Existing Series B Preferred Stock issued and outstanding.
As of the Effective Date, or as soon as reasonably practicable thereafter, Reorganized Sanchez will issue the New Common Stock to the holders of claims in Class 3 described above. The Post-Effective Date New Common Stock will be issued based on the outcome of the Lien-Related Litigation. Under the Plan, the organizational documents and new stockholders' agreement of Reorganized Sanchez will become effective on the Effective Date or as soon as reasonably practicable thereafter. The Confirmation authorizes Reorganized Sanchez to issue shares of New Common Stock pursuant to the Plan. The shares of New Common Stock issued pursuant to the Plan will be issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided by section 1145 of the Bankruptcy Code or, only to the extent such exemption under section 1145 of the Bankruptcy Code is not available, any other available exemption from registration under the Securities Act and such similar federal, state and local laws.
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Management Incentive Plan
The Plan authorizes the board of directors of Reorganized Sanchez (the "Reorganized Sanchez Board") to implement a management incentive plan for officers and directors of the reorganized Debtors on terms to be determined by the Reorganized Sanchez Board.
Directors and Officers of Reorganized Sanchez
The composition and membership of the initial Reorganized Sanchez Board shall be
designated by the
Item 7.01. Regulation FD Disclosure.
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The information contained in this Item 7.01 and Exhibit 99.2 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be incorporated by reference into any filings made by the Company under the Exchange Act, except as may be expressly set forth by specific reference in such filing.
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Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical facts,
included in this Current Report on Form 8-K that address activities, events or
developments that we expect, believe or anticipate will or may occur in the
future are forward-looking statements. These statements are based on certain
assumptions we made based on management's experience, perception of historical
trends and technical analyses, current conditions, anticipated future
developments and other factors believed to be appropriate and reasonable by
management. When used in this presentation, words such as "will," "potential,"
"believe," "estimate," "intend," "expect," "may," "should," "anticipate,"
"could," "plan," "predict," "forecast," "budget," "guidance," "project,"
"profile," "model," "strategy," "future" or their negatives or the statements
that include these words or other words that convey the uncertainty of future
events or outcomes, are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words.
Forward-looking statements are not guarantees of performance. Such statements
are subject to a number of assumptions, risks and uncertainties, many of which
are beyond our control. These include risks described in our Annual Report on
Form 10-K for the year ended
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. 2.1 Second Amended Joint Chapter 11 Plan of Reorganization ofSanchez Energy Corporation and Its Debtor Affiliates (incorporated by reference to Exhibit 1 of the Confirmation Order attached as Exhibit 99.1 hereto). 99.1 Order Approving Disclosure Statement and Confirming Second Amended Joint Chapter 11 Plan of Reorganization ofSanchez Energy Corporation and Its Debtor Affiliates. 99.2 March Monthly Operating Report for the period endedMarch 31, 2020 , filed with theU.S. Bankruptcy Court for the Southern District of Texas . 5
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