A judge has crushed the hopes of a group of investors in Ultra Petroleum Inc, a bankrupt natural gas company, who had sought to collect a $300 million windfall because a clerk entered a court order on the wrong date.
U.S. Bankruptcy Judge Marvin Isgur approved on Feb. 13 the disclosures for Ultra's plan to emerge from Chapter 11, although his order was not put on the docket until the morning of Feb. 14. Some holders of Ultra's notes then argued that the delay changed the plan's economics in their favor, until Isgur ruled against them on Tuesday.
"I couldn't have imagined this would be entered on the wrong date," Isgur said, adding that it was not clear why.
During a hurried conference call, the Houston bankruptcy judge said all the parties expected his order to be entered on the court's docket the same day he approved it, not the next morning.
The mix-up prompted some holders of Ultra's notes to file court papers on Monday arguing the day difference would mean the company's rights offering should be delayed to Wednesday from Tuesday, as originally planned.
The delayed rights offering in turn would affect the formula for natural gas prices used to establish Ultra's value in its Chapter 11 plan, reducing it to $5.5 billion from $6 billion.
That in turn would impact how noteholders would split the equity in the reorganized company with its shareholders. At the lower valuation the noteholders estimated they would get an additional $303 million, according to court filings.
A group of Ultra's shareholders argued the noteholders were trying to "seize upon a clerical inadvertence to deprive equity holders of hundreds of millions of dollars of value."
Isgur said he would not change the "economics" of his order, and the restructuring agreement behind Ultra's disclosures, over a clerical error. He maintained Tuesday was the opening of Ultra's rights offering.
Ultra plans to emerge from bankruptcy by converting $1.3 billion of its notes into stock in the reorganized company and by raising $580 million from a rights offering.
Ultra produces gas in Wyoming, Pennsylvania and Utah, and filed for Chapter 11 protection in April amid the worst energy price slump in a generation.
(Reporting by Jim Christie; editing by Grant McCool)