The judge overseeing proceedings of Intervention Energy‘s bankruptcy, overturned lender EIG Global Energy Partner’s bid to dismiss the court case.
Intervention filed for bankruptcy protection in May 2016 and was immediately met with opposition from EIG, which called for the case to be dismissed.
EIG argued that Intervention didn’t have the authority to file for bankruptcy without its approval as such an action required shareholder approval.
As part of the deal, Intervention agreed to secure 100% shareholder approval in order to file for bankruptcy. However, EIG said it didn’t consent to the company’s bankruptcy filing.
Intervention and EIG met in court last week, both warning that a ruling could have a broad impact beyond their specific dispute.
Intervention’s attorney said if the judge agreed to dismiss the case, this decision would allow other lenders to demand such consent rights and could negatively impact the companies’ ability to restructure outside of court.
Meanwhile, EIG argued a decision in favor of Intervention would essentially take away a company’s rights under state law to enter contracts.
A hearing would be held on Tuesday to discuss the judge’s decision to deny the dismissal as well as to proceed with other requests designed to keep Intervention’s bankruptcy moving forward.
EIG holds about $140m of Intervention’s bond debt, which stems from a $200m financing deal reached in 2012 to finance well developments.