Pacific Energy was engaged in the acquisition and development of oil and gas properties. The company’s assets were primarily located offshore California and in the Cook Inlet area of Alaska. Pacific Energy owneds and operated a portion of its assets, and held a non-operating minority working interest in the remainder of its assets.
As a result of violating financial covenants and not achieving certain milestones under its debt agreements, Pacific Energy defaulted on its credit facilities in early 2008. Following a dramatic decrease in the market price of oil during the second half of 2008, the company began to incur large operating losses. Faced with liquidity constraints, Pacific Energy and its subsidiaries filed petitions for reorganization under Chapter 11 to facilitate access to an immediate source of capital as it works to restructure its debt.
In December 2008, a team of Zolfo Cooper professionals, including a Chief Restructuring Officer, were retained by Pacific Energy on a prepetition and post-petition basis. Primary responsibilities included:
- Improving communications between Pacific Energy and its pre-existing lenders.
- Stabilizing cash flows and seeking opportunities to enhance business performance.
- Evaluating restructuring alternatives, including an out-of-court solution and a pre-packaged Chapter 11 filing.
- Pursuing strategic alternatives including a potential sale of some or all of the company’s assets.
- Assisting in negotiating a debtor-in-possession (DIP) facility between Pacific Energy and its existing lenders.
- Assisting the company in its preparation to file and continuing to support Pacific Energy throughout the Chapter 11 process.
- Managing all other professionals involved in the restructuring process.
The company completed the sale of substantially all its assets through a Section 363 sale process.