United States: Morrison & Foerster Achieves Another Significant Outcome For Debtor-Side Clients In Maxus Energy Bankruptcy Plan Confirmation
Last Updated: June 2 2017

Morrison & Foerster LLP ("MoFo") represented Houston-based Maxus Energy Corporation, and certain of its affiliates (collectively, "Maxus"), in its bankruptcy cases and achieved confirmation of their joint chapter 11 plan by the U.S. Bankruptcy Court for the District of Delaware on May 22, 2017.  Under the plan, Maxus's most valuable assets— unresolved litigation claims against YPF, S.A., the state-run oil company of Argentina and Maxus's parent company—will be transferred to a liquidating trust and prosecuted for the benefit of Maxus's stakeholders.  The plan also provides for the creation of two additional trusts to facilitate ongoing and future environmental cleanup efforts.  The plan is expected to go effective in June 2017.

Formed in 1983 after its divestment from Diamond Shamrock Corp. ("Diamond Shamrock"), Maxus focused its operations on maintaining a large portfolio of exploration and production ("E&P") assets in the United States and abroad.  Maxus also managed a host of legacy environmental liabilities, including its contractual indemnity to Occidental Chemical Corporation, the purchaser of a chemical business formerly operated by Diamond Shamrock and later found to have released hazardous substances into New Jersey's Passaic River.  In 1995, YPF S.A. ("YPF") acquired Maxus through a leveraged buyout and, during the years that followed, transferred all of Maxus's international E&P assets to other subsidiaries of YPF.  The global restructuring left Maxus dependent upon YPF for working capital.  Maxus filed for chapter 11 protection in June 2016 in order to liquidate its assets (including a proposed settlement of its claims against YPF) and transition its environmental remediation efforts to other parties.  

During the course of the chapter 11 cases, MoFo guided a process that was responsive to the views of creditors and that eventually lead to a rejection of the proposed settlement with YPF in favor of a plan based on contingent future recoveries.  The result was an innovative chapter 11 plan that gained the support of over 99% in amount of asserted voting claims.  MoFo's ability to deftly navigate the chapter 11 process, as well as its deep expertise with bankruptcy-related environmental issues, enabled Maxus to maximize value for stakeholders and resolve its environmental liabilities.

The MoFo team was led by James M. Peck and Jennifer L. Marines, with substantial support from attorneys in numerous practice groups including MoFo's business reorganization, environmental, litigation, employee benefits, and corporate practices.  The case demonstrates the importance of a firm culture of collaboration across multiple practice groups that yields extremely positive results for clients.     

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