December 10, 2020 – The Court hearing Permian Holdco 1, Inc. cases issued an order approving the Debtors’ (i) combined Plan and Disclosure Statement (conditionally), (ii) proposed Plan solicitation and voting procedures and (iii) proposed timetable culminating in a January 25, 2021 Plan confirmation hearing [Docket No. 377].

Also on December 10th, the Debtors filed a solicitation version of their Combined Amended Joint Chapter 11 Plan and Disclosure Statement, with a separate blackline showing changes to the version filed on December 8, 2020 [Docket Nos. 379 and 380, respectively].

The following is an updated summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1 (“Priority Non-Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is for Holdco 1: $0, Holdco 2: $0, Holdco 3: $0 and Permian Tank: $0 – $17,377.26 and the estimated recovery is 100%.
• Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and entitled to vote on the Plan. The aggregate amount of claims is for Holdco 1: $0, Holdco 2: $0, Holdco 3: $0 and Permian Tank: $0 – $17,651.37 and the estimated recovery is 100%.
• Class 3 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is for Holdco 1: $0-$3,000,000^FN1, Holdco 2: $31,382,070.91, Holdco 3: $19,434,827.75 and Permian Tank: $8,500,000- $9,500,000 and the estimated recovery is Holdco 1: 0-1%, Holdco 2: 0-1%, Holdco 3: 0-1% and Permian Tank: 0-21.34%. Holders of General Unsecured Claims shall receive such Holder’s pro rata share of the Distribution Proceeds, consistent with the Permian Trust Waterfall, until such General Unsecured Claims are Paid in Full.

^FN1The $3,000,000 estimated amount of Claims against Holdco 1 reflects the approximate amount of proof of Claims filed against Holdco 1 as of the filing of this Plan. The Debtors believe that the total amount of Claims against Holdco 1 are substantially less than the filed amount.

• Class 4 (“Intercompany Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 0%.
• Class 5 (“Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 0%.

Key Dates:

• Voting Deadline: January 15, 2021
• Objections or brief in support of approval of the Combined Disclosure Statement and Plan: January 21, 2021
• Confirmation Hearing: January 25, 2021

Sale Process

According to the amended Combined Document [Docket No. 367]: “After months of failed negotiations, and with consummation of the Proposed Prepetition Global Resolution no longer a realistic option, after carefully considering, among other things, the Company’s cash position, which was nearing an all-time low (exclusive of the PPP Funds, which the Company was only using for payroll and certain other permitted purposes, in compliance with the Paycheck Protection Program and the CARES Act) and the increasing pressure from the Company’s vendor base, the remaining members of the Board determined that the only viable path to preserving and maximizing the value of the Company’s assets was to commence these Chapter 11 Cases. Subsequent to the filing of the Chapter 11 Cases, the Board determined that it was in the Company’s best interest to sell all or substantially all of their assets through a robust Court-approved marketing and sale process (the ‘Sale Process’)…

In connection with the Sale Process, New Permian Holdco, Inc. (the ‘Stalking Horse Purchaser’), an affiliate of NMFC, credit bid the indebtedness for the DIP Facility and the Prepetition Credit Facility for the Company’s assets in that certain asset purchase agreement dated as of July 20, 2020 (the ‘Stalking Horse APA’), which served as the baseline for all prospective bidders to negotiate from, and was subject to higher or otherwise better bids for the assets pursuant to certain customary bidding procedures.”

Global and Noteholder Settlements

The amended Combined Document further states: “Following its appointment, the [Official Committee of Unsecured Creditors] conducted, and is continuing to conduct, investigations into potential claims and causes of actions held by the Debtor Debtors and its Estate their Estates against various parties in interest, including current and former directors and officers of the Debtors. In connection therewith, the Parties and their advisors analyzed who is the proper party to pursue those claims and causes of action. Following weeks of extensive, good faith, and arm’s-length negotiations, the Parties reached a carefully crafted path forward for the Chapter 11 Cases through the Global Settlement. On September 16, 2020, the Bankruptcy Court entered the Settlement Order.”

The Global Settlement establishes a framework for the Debtors’ asset sale, Plan terms and DIP Facility and other funding.

The mended Combined Document: “Following the approval of the Global Settlement, the Debtors, the Committee, NMFC, SSIG, Solace and Beatty entered into negotiations regarding the terms of this Plan. Following weeks of extensive, good faith, and arm’s-length negotiations, the Debtors, the Committee, NMFC, SSIG and Solace reached a settlement which provided for a joint plan for the Debtors, as set forth herein.” The primary terms of the settlement are as follows:

• Joint Plan; Vesting of Assets. The Debtors, Committee, SSIG, Solace, Beatty and NMFC shall agree to support, and the Debtors shall propose, a joint plan that provides a recovery to noteholders, whose claims are solely against Holdco 2 and Holdco 3. All assets of all four Debtors will vest in the Permian Trust.
• Distributions. The distribution of proceeds from the Litigation contemplated in the Global Settlement was subsequently revised as follows: With respect to the first $800,000 of net proceeds received by the Permian Trust, 99% for the benefit of Holders of Class 3 General Unsecured Claims against Permian Tank and 1% to Holders of Class 3 General Unsecured Claims against Holdco 3. With respect to the next $2,000,000 of net proceeds received by the Permian Trust, 78% shall be for the benefit of NMFC, 19% shall be for the benefit of Holders of Class 3 General Unsecured Claims against Permian Tank, and 3.0% shall be for the benefit Holders of Class 3 General Unsecured Claims against Holdco 3. With respect to all net proceeds in excess of the foregoing, 47.5% shall be for the benefit of NMFC and its Affiliates, 47.5% shall be for the benefit of Holders of Class 3 General Unsecured Claims against Permian Tank, 3.5% shall be for the benefit of Holders of Class 3 General Unsecured Claims against Holdco 3 and 1.5% for the benefit of Holders of Class 3 General Unsecured Claims against Holdco 2.
• Solace’s Class 3 General Unsecured Claim against Permian Tank shall be subordinated to all other Class 3 General Unsecured Claims against Permian Tank, and Solace shall receive no distribution on account of such claim until all other General Unsecured Claims against Permian Tank are paid in full. Upon payment in full of all claims of NMFC and its Affiliates and all Claims against Permian Tank, Holdco 3 and Holdco 2, any further net proceeds shall be for the benefit of Holders of Class 3 General Unsecured Claims against Holdco 1.
• Limitations of Liabilities. The Permian Trustee may commence litigation against the Solace Defendants. The total recovery by way of settlement or judgment in all such litigation may not exceed the aggregate total amounts that may be available under any current insurance policies of the Debtors, and any award of damages (inclusive of expenses) may be pursued only against any applicable insurers. The litigation against the Solace Defendants shall be limited to claims and allegations against them solely in their capacity as former directors, employees and/or officers of the Debtors against the Holdco entities.
• Plan Support. Solace and its Affiliates and SSIG and its Affiliates shall vote in favor of the Plan, not submit a Release Opt-Out and shall not otherwise object to the Plan.”

About the Debtors

According to the Debtors: “PermianLide is the largest United States’ manufacturer of above-ground storage tanks and processing equipment for the oil and natural gas exploration and production industry. PermianLide has more than 40 years of operating experience, with two well-known industry brands; Permian Tank & Manufacturing and Lide Industries. PermianLide has 8 manufacturing plants and two distribution centers across Texas, Oklahoma and South Dakota, where the newest plant services the Bakken, Niobrara and Powder River shale plays.”

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