Goodrich Bankruptcy and the Royalty Owner
Goodrich Petroleum Corporation and Goodrich Petroleum Company, LLC filed Chapter 11 bankruptcy on April 15, 2016. Since then many royalty owners in our area have received a 26 page small print set of documents to explain, in detail, about the situation and how it affects the recipient (you).
I’ve received a few inquiries on the subject. So, I thought I’d research the issue and let you know what I have learned.
First, let me be clear, I am NOT an attorney and I am NOT giving you legal advice. There are folks much more qualified and learned who can help you should you decide you need their expertise. And, IF YOU HAVE ANY QUESTIONS OR QUALMS, please do so.
That out of the way, here is what I have done. I have spoken with some royalty owners who have spoken to employees of Goodrich. I have spoken with a local attorney, Reggie Jones, here in Liberty. I have scanned the bankruptcy papers. Finally, I have had email exchanges with Robert Turnham, President of Goodrich Petroleum.
Let me take the last response first. When I inquired of Mr. Turnham about the bankruptcy here was his official response:
“We have segregated the royalty amount normally distributed at the end of April into a separate account and asked the judge to approve of the payment. The technicality is that the funds were received prior to filing date and because of that there is a freeze on all accounts and we can’t distribute until the judge approves the release. We have formally asked the court to grant the approval to release the royalty checks but the judge hasn’t had the hearing and made the ruling.
The royalty amounts due end of May and every month thereafter aren’t affected by the process, as this will be post-petition revenue and we don’t need approval from the court to issue checks timely.
Although no one wants to have to restructure through the courts, the company will be in very good shape after coming out of restructuring and we look forward to getting active again in the TMS once oil prices recover.”
What I understand from this is that money is on hand to pay all royalty owed for the production sold through February 29, 2016, but these payments cannot be released/paid to royalty owners unless and until a bankruptcy court judge rules in favor of the payment/release. Any production sold after February 29, 2016 should be paid to royalty owners without any issues.
The bankruptcy documents (Page 2, item 7) seem to provide a deadline of July 15, 2016 (or possibly October 12, 2016?) for filing a claim against Goodrich Petroleum. The Goodrich Chapter 11 plan appears to list royalty owners as “Other Priority Claims” with the intention to pay fully.
So, what do you do?
Based on all of the above plus an email exchange with Attorney Jones, at this time, nothing.
The presumption is that the bankruptcy judge will approve of the payments for amounts due for unpaid production sold through February 29, 2016 and checks will be sent out sometime in May for production sold through February of 2016.
HOWEVER, IF you have not received payment approaching the July 15 deadline and you are owed anything worth the time and money, you may want to obtain legal advice on what, if anything, you can do to protect what is due you.
While I have you, let’s talk a little about the future of the TMS.
As always, let me reassure folks that I have no inside knowledge of the TMS and refuse to predict the future. I believe, though, that until some wonderful alternative to petroleum is found to fuel our vehicles the TMS is going to be of interest.
In essence, I believe that when/if prices rise we will see a revival of drilling in the TMS.
In the meantime, enjoy the low price of gasoline!