Dealing With Fractional Oil, Gas Interests In Bankruptcy
Law360, New York ( June 1, 2015, 10:19 AM EDT) -- As depressed oil and gas commodity prices inevitably lead to difficult times and ultimately bankruptcy for some borrowers in the oil and gas industry, the structure of debtors' financing arrangements will come under scrutiny. One issue that arises with respect to oil and gas financings is whether transactions involving fractional oil and gas interests effectuate true property conveyances or are simply disguised loans in which the oil and gas interest is not actually conveyed. Another is the scope of protection provided by a safe harbor in the Bankruptcy Code concerning certain fractional oil and gas interests. Decisions from a bankruptcy winding through the Southern District of Texas provide insight into both issues....
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