Appalachian pure-play Arsenal Resources this week said its operations are unaffected by the bankruptcy filing of its holding company.
Arsenal Energy Holdings LLC (AEH) filed for Chapter 11 bankruptcy protection on Monday in a proceeding that it is expected to take less than two weeks. Stakeholders have approved the debt-for-equity exchange to wipe out $861 million of outstanding subordinated bonds.
Arsenal said the pre-packaged plan has the approval of 93% of the subordinated lenders that hold most of the principal amount. All of the common equity holders have also voted in favor of the plan, which was filed in the U.S. Bankruptcy Court for the District of Delaware.
Formerly Mountaineer Keystone Energy LLC, Arsenal was formed in 2011 with the backing of the energy-focused private equity firm First Reserve Corp. It holds 208,000 acres in Pennsylvania and West Virginia. The company is run by Jonathan Farmer, who took over as CEO in 2017 to replace David Wood, who was named late last year as the chief of Gulfport Energy Corp.
Arsenal stressed that the bankruptcy proceeding, which is anticipated to be completed by Feb. 14, only involved AEH. None of the operating subsidiaries are expected to be impacted, and employees, customers, vendors and lenders are to be paid without interruption, Farmer said.