Luca International settles with the SEC and confirms Chapter 11 Plan
HOUSTON, July 19, 2016 /PRNewswire/ -- Houston-based Luca International Group LLC ("Luca") and its affiliates confirmed a Chapter 11 Plan of Reorganization on July 18, 2016. The U.S. Bankruptcy Court for the Southern District of Texas approved the restructuring that allows Luca to pay creditors and to establish a liquidating trust to pursue claims. To accomplish this, all creditors worked together to resolve issues related to M&M lien claims, an SEC lawsuit, and issues surrounding sales proceeds from the company's assets. In addition, this was one of the rare cases where an equity committee was appointed.
"We are pleased that the creditors of Luca worked together to confirm this plan for the benefit of all stakeholders," said Loretta Cross, Chief Restructuring Officer of the twelve Luca debtors and a Managing Director with Stout Risius Ross, Inc. "This complex case was difficult because all parties felt like they had been misled by the prior management. My biggest job was to get all parties to realize there would be a better outcome for everyone if we found a consensual solution." In the end, all classes of creditors voted in favor of the plan.
Luca International Group LLC, an independent upstream energy company with properties in Louisiana and Texas, filed for protection under Chapter 11 on August 6, 2015 in response to multiple lawsuits stemming from allegations of fraud and breach of contract. The SEC alleges that the former CEO of Luca, Bingqing Yang, knew that the company was earning no profits and sinking under a mountain of debt, yet she made presentations to investors portraying a successful oil and gas operation with millions of barrels of oil reserves and billions of cubic feet in gas reserves. Loretta Cross was appointed Chief Restructuring Officer to lead the restructuring efforts. Under Ms. Cross's direction post-petition financing was secured, the assets were sold, and claims were investigated.
An essential part of the Plan is the formation of a Trust that will pursue litigation. The Trustee will be Randy Williams of Thompson & Knight.
The parties were represented by Ed Rothberg and Brendetta Scott from Hoover Slovacek LLP (for Luca International Group and eleven affiliates); John Melko of Gardere Wynne Sewell LLP (for the post-bankruptcy lenders); Elizabeth M. Guffy and Phil Eisenberg of Locke Lord, LLP (for the Official Equity Committee) and John Yun and Sonia Chae from the SEC. Loretta Cross and John Baumgartner from Stout Risius Ross served as the financial advisor and CRO of the Debtors.
About Stout Risius Ross
SRR is a global advisory firm specializing in Investment Banking, Valuation & Financial Opinions, and Dispute Advisory & Forensic Services. We serve a range of clients from Fortune 500 corporations to privately held companies in numerous industries around the world. Our clients and their advisors rely on our premier expertise, deep industry knowledge, and unparalleled responsiveness on complex financial matters. For more information, visit www.SRR.com, follow us on Twitter @StoutRisiusRoss, and/or connect with us on LinkedIn.
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