In In re Intervention Energy Holdings, Case No. 16-11247 (KJC) (Bankr. D. Del. June 6, 2016), U.S. Bankruptcy Judge Kevin J. Carey of the District of Delaware denied a creditor’s motion to dismiss the voluntary bankruptcy petition of a Delaware limited liability company filed in contravention of a provision in its operating agreement that required the unanimous consent of all members, including the creditor, to commence a bankruptcy case. The creditor, as a condition to consenting to a forbearance agreement, had required the debtor to admit it as a member and amend the LLC agreement to require unanimous consent of all members to any voluntary bankruptcy filing.
The debtors, Intervention Energy Holdings and its wholly owned subsidiary, Intervention Energy, were Delaware limited liability companies engaged in oil and natural gas exploration and production. EIG Energy Fund had purchased senior secured notes from the debtors, and subsequently declared the debtors in default of certain maintenance covenants in their agreement. The parties then entered into a forbearance agreement, which provided that EIG would waive all defaults if the debtors raised enough equity capital to pay down a portion of the secured notes by a date certain. As a condition to the forbearance agreement, the debtors agreed to admit EIG as a member of Holdings with one common unit, a so-called “golden share,” and to amend Holdings’ LLC agreement to require the unanimous consent of the members (including EIG) prior to any voluntary bankruptcy filing. The arrangement was intended to ensure EIG that the debtors would not use the forbearance period to prepare and commence a bankruptcy proceeding.
