DALLAS, Aug. 19, 2015 /PRNewswire/ -- As previously
announced, Southwest Bank, the trustee of the Dominion Resources
Black Warrior Trust (the "Trust") was informed by Walter Energy,
Inc., the parent of Walter Black Warrior Basin LLC (the "Company"),
stating that it, together with certain of its subsidiaries and
affiliates, including the Company ("Debtors") filed a petition for
relief under Chapter 11 of the U.S. Bankruptcy Code with the United
States District Court for the Northern District of Alabama Southern
Division on July 15, 2015 and that it
has an agreement with lenders regarding a pre-negotiated
restructuring plan. In the letter, Walter Energy, Inc. advised the
Trust that it is not permitted to pay obligations that arose prior
to July 15, 2015, including royalty
payments. Specifically, the Trustee was informed by Walter Energy,
Inc. that it will not be paying the distribution to the Trust,
which would normally be paid by August
14, and normally would include royalty payments for the
production months of April, May and June
2015, as well as the portion of any future quarterly
distributions relating to production attributable to periods prior
to July 15, 2015. The Trustee has
received no assurances regarding the status of distributions
relating to production for periods after July 15, 2015. On the date the bankruptcy hearing
was filed – in a series of "first day motions" – the Debtors filed
motions relating to use of their cash collateral and cash
management, which provide that Debtors' cash and certain other
property constitute collateral of the Debtors' lenders subject to
protective liens and permit use of a "zero balance" cash management
system where receipts from operations including Debtors' gas
operations could be swept into certain concentration or
disbursement accounts. The motions do not separately segregate or
provide separate treatment for production proceeds relating to the
Trust's overriding royalty interests. The Trustee filed motions
asking the court to reconsider and amend the Debtors' cash
management order and has objected to the cash collateral motion
seeking segregation of production proceeds relating to the Trust's
overriding royalty interests and judicial confirmation that such
proceeds are not property of the Debtor's bankruptcy estate.
A hearing was held August 18, 2015
where the court denied the Trust's motion to reconsider the
Debtors' cash management order and denied the Trust's request for a
temporary restraining order. A hearing on the Trust's motion
regarding the Debtors' cash collateral motion is scheduled for
September 2, 2015.
The Trustee has additionally filed a separate action seeking
declaratory judgment that the Trust's overriding royalty interests
and related production proceeds are not property of the debtors'
bankruptcy estate and seeking a preliminary injunction against the
debtor to prevent it from (1) co-mingling the production proceeds
with other funds of the debtor; (2) placing any lien or encumbrance
on the production proceeds and (3) refusing to make distributions
in accordance with the Conveyance governing the overriding royalty
interests and Alabama law. The
Trustee continues to evaluate legal options with respect to the
Trust.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dominion-resources-black-warrior-trust-announces-updated-information-on-walter-energy-inc-bankruptcy-proceedings-300130896.html
SOURCE Dominion Resources Black Warrior Trust