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Featured successes and recognition
Learn about the Deloitte Corporate Restructuring Group’s (Deloitte CRG) latest featured success stories, people, and industry recognition.
A tale of reorganization
Warren Resources, Inc. was pieced together through various acquisitions and geographically fragmented across three diverse basins in California, Pennsylvania, and Wyoming. The company’s operations generated approximately $100 million revenue in 2015 mainly from a mix of oil and natural gas production but also through midstream assets in Wyoming. However, the company was saddled with almost $500 million in debt spread across first lien, second lien, and senior notes, and the current price environment was insufficient to service all of the debt.
In late 2015, a new senior management team was brought in to take control of the company and ‘right the ship’ during the persisting low commodity price environment. They immediately began engaging the major creditors, the company’s investment banker, and other stakeholders in pursuit of a potential consensual restructuring. After several months of extensive negotiations, the new management team made the decision to forgo the senior note’s interest payment in order to preserve liquidity and prepare for a court driven solution. This triggered cross defaults on all debt.
The first lienholders immediately required $10 million in cash be placed in their controlled account, but agreed to allow enough working capital to remain in the company to sustain day-to-day operations. Concomitant with this strategy, a call was made to Deloitte CRG for help preparing them for a potential chapter 11 bankruptcy to help restructure their balance sheet.
Deloitte CRG’s tasks were clear but challenging due to the company’s employee turnover, limited finance and accounting resources, multiple locations, and a tight timeline for a very fast bankruptcy filing, if necessary. The first priorities were to advise the company in estimating the funding required to run the business during a bankruptcy and to obtain the data necessary for the company to create the first day motions and disclosure statement filings.
Deloitte CRG personnel leveraged their industry knowledge, interaction with various levels of management within the company, and financial analytic tools to quickly assess the 13-week cash receipts and disbursements, along with a six-month cash forecast model to identify the working capital/cash requirements and timing necessary to complete the restructuring process. Also, Deloitte CRG worked closely with the company and its counsel to obtain and analyze data necessary to draft reports to fulfill the bankruptcy reporting requirements, such as first-day motion filings, disclosure statement, initial debtor interview, and monthly operating reports on-time. Further, Deloitte CRG was able to leverage its resources and relationships built over a short period of time to assist the company to efficiently file their statements and schedules within 45 days of filing.
This team effort was in line with managements’ goals to keep the timeline for voting and emergence on track. Deloitte CRG’s role during the process contributed significantly to Warren Resources’ ability to effectively reorganize and exit from bankruptcy as a newly capitalized going concern under a consensual plan—and all within four months of filing for chapter 11 bankruptcy protection.
Deloitte CRG is three time TMA Award winner
The Turnaround Management Association (TMA) honors excellence through its annual awards program which recognizes achievements in the categories of turnarounds and transactions. Deloitte CRG is honored to have been recognized to receive awards for TMA’s 2014 and 2016 Award Programs.
In 2016 Deloitte CRG was recognized as the recipient of the Non-Profit Transaction of the Year Award for their work on Tuomey d/b/a Tuomey Healthcare System, a South Carolina nonprofit corporation.
In 2014 Deloitte CRG won the categories of Mega Company Transaction of the Year (company revenue $1 billion at the time of transaction) for their work on AMR Corporation (American Airlines) and Small Company Transaction of the Year (company revenue $50 million at the time of transaction) for their work on TC Global (Tully’s).
Recent awards and recognition
Michael Epstein will be inducted as a Fellow of the American College of Bankruptcy for professional excellence and exceptional contributions to the fields of bankruptcy and insolvency in Washington D.C. on March 10, 2017.
Deloitte CRG won two 2016 M&A Advisor Turnaround Awards:
- Energy Deal of the Year for Chapter 11 Reorganization of Venoco
- Restructuring Deal of the Year for the Chapter 11 Reorganization of Quicksilver Resources Inc.
- Middle Markets Turnaround Consulting Firm of the Year
- Cross Border Distressed M&A Deal of the Year for Brookstone
- Healthcare Services Turnaround of the Year for St. Francis Hospital