Breitburn Energy Partners

In May 2016, the company filed for bankruptcy due to prolonged low oil prices, a highly leveraged balance sheet from a major acquisition, and an upcoming RBL credit facility redetermination. A DIP facility from RBL lenders provided liquidity and time to pursue a reorganization plan. The company’s MLP structure exposed public equity holders to significant tax liabilities under a debt cancellation scenario, leading the court to mandate the formation of an equity committee.

Carl Marks Advisors (CMA) was retained as the equity committee’s exclusive investment banker to guide the financial restructuring. Key contributions included reviewing cash flow and liquidity, negotiating DIP amendments for extended runway, and evaluating the debtors’ business plan, capital needs, and Permian development. CMA developed a restructuring term sheet outlining the equity committee’s demands, including equity shares, warrants, and rights offerings. They also collaborated with industry experts on valuation for a contested hearing and worked with counsel to assess and reduce tax liabilities for equity holders.

CMA’s efforts successfully mitigated the tax burden on equity holders as part of the overall restructuring, achieving a significant win for the committee.