Hard Rock Exploration lender Huntington National Bank has filed a motion to convert the company’s Chapter 11 proceeding to Chapter 7, arguing that the estate is administratively insolvent.
The lender, owed USD 26m, pointed to testimony at a 4 October hearing from CEO James Stephens, who said that the debtor and its bankrupt affiliates are cash flow negative, has a monthly cash flow shortage of USD 325,000 and expects the company’s cash position to deteriorate by USD 550,000 over the next two months.
“The Debtors are clearly experiencing substantial and continuing losses,” the lender said. “Due to the Debtors’ hemorrhaging of cash, rehabilitation of the Debtors’ business is impossible.”
Judge Frank Volk of the US Bankruptcy Court for the Southern District of West Virginia has scheduled a 15 November hearing on the conversion motion.
Hard Rock, a Charleston, West Virginia-based oil and gas firm, filed for Chapter 11 on 5 September after a state court declined to extend a temporary restraining order against Huntington. The company owns or manages 387 wells in the Blue Jacket and Amber Banks regions of West Virginia’s Lower Huron section.