Committee Representations – There is, perhaps, no party in bankruptcy facing more uncertainty than the various committees that may be formed in a business reorganization. Committee counsel must have the experience to decipher bankruptcy proceedings, the knowledge to understand how the Debtor business works, the diplomacy to juggle competing needs between the diverse interested parties in bankruptcy, and the common sense to recognize opportunity for the committee and its constituents. Forshey Prostok succeeds by consistently creatively and aggressively pursuing opportunities for recovery.
Forshey Prostok LLP represented the Official Committee of Royalty Owners (“Royalty Committee”) in the Chesapeake Energy Corp Bankruptcy, which filed for Chapter 11 relief in the Southern District of Texas – Houston Division (Hon. David Jones, presiding). The United States Trustee appointed the Royalty Committee. The appointment of a Royalty Committee was exceptional and innovative in several respects. The appointment of an Official Royalty Committee was a first in the complex oil and gas bankruptcy cases. Before the Bankruptcy, royalty owners across the country sued Chesapeake in various cases. The Debtor estimated it had 200,000 royalty owners who were potential creditors -- the largest number of royalty owners listed in any recent Southern District of Texas bankruptcy cases. Chesapeake filed an emergency motion to disband the committee days after its formation. Forshey Prostok LLP defended against the motion and prevailed. The Court denied the Debtors’ motion to disband, finding small royalty owners could benefit from a royalty committee.
The Debtors’ original Plan of Reorganization treated all royalty owners as unsecured creditors without regard to the governing State law provided in the leases, including claims for funds held in suspense. Each revision to the Plan provided enhanced rights and reservations for the royalty owners. The Royalty Committee walked a fine-line. They worked to balance protecting royalty owners’ rights to pursue pre-petition claims while also supporting the Debtors' continued operation versus liquidation, knowing many of its constituents relied on the income stream they received from royalty proceeds.
Forshey Prostok LLP fielded hundreds of calls from royalty owners with questions regarding the proof of claim process and plan confirmation process. In what may have been the first for an Official Committee, Forshey Prostok LLP assisted the Royalty Committee in producing a plain English video explaining the Plan and Disclosure Statement process.
The Royalty Committee worked diligently to fight for better treatment of royalty owners in the Plan and accomplished a beneficial result without jeopardizing the Debtors’ continued operations. At the end of the trial on confirming the Plan, Chesapeake's CEO Doug Lawler also committed to "fostering a positive corporate culture and treating all of Chesapeake’s stakeholders with transparency."
Forshey Prostok served as co-counsel for the Official Committee of Unsecured Creditors in the Victory Medical Center case which involved a parent company and four specialized surgical hospitals situated throughout the State of Texas. The Victory debtors filed bankruptcy to facilitate an expeditious sale of their assets. As counsel for the Committee, Forshey Prostok assisted in the sale of two of the Debtor's hospitals, the wind-down and closure of two of the Debtor's hospitals, and the negotiation of a consensual plan of reorganization.
Forshey Prostok currently represents the Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy case of Domistyle, Inc. pending in the Eastern District of Texas. Prior to filing bankruptcy, Domistyle operated as a leading designer and manufacturer of high-end scented candles, home décor and home fragrance products sold primarily through “big box” national retailers. Early in the bankruptcy case, the Firm assisted the Committee in the negotiation of a Plan Support Agreement with the Debtor and principal lender to ensure that the Committee’s constituent creditors would be provided with favorable Plan treatment. To this end, the Committee is serving as co-proponent of a Joint Plan of Liquidation pending before the Court which incorporates the negotiated terms of the Plan Support Agreement.
Forshey Prostok served as counsel to the Official Committee of Unsecured Creditors of Wall Homes, Inc., et al.
Forshey Prostok represented the Official Committee of Unsecured Creditors of The Bombay Company, Inc., et al., one of the largest retail bankruptcy cases ever filed in Texas. The Committe and Debtors confirmed a joint plan of liquidation that resulted in payment of a significant dividend to unsecured creditors.
Forshey Prostok currently represents the Official Committee of Unsecured Creditors in this Chapter 11 case pending in El Paso, Texas. Through the Firm’s effort, the unsecured creditors will become beneficiaries of and will receive distributions from a litigation trust established to pursue various claims and causes of action post-confirmation.
Forshey Prostok represented the Official Unsecured Creditors Committee of this independent physician association that provided services to over 1,700 Doctors who treated over 200,000 patients. The Chapter 11 Trustee and the Committee worked closely to insure maximum recovery for the estate’s creditors.
Members of the firm represented the Official Unsecured Creditors’ Committee in the Chapter 11 case with a total debt in excess of $120 million. After selling litigation claims brought by the Committee, a joint plan was confirmed and unsecured creditors obtained a significant recovery.
Members of the firm represented the Official Unsecured Creditors’ Committee in the Chapter 11 case of a carpet pad manufacturer whose facility was destroyed by fire. The firm on behalf of the Committee negotiated and successfully reduced the Texas Natural Resource Conservation Commission’s claim from in excess of ten million dollars to less than one million. The Committee was co-proponent of the Plan of Reorganization confirmed by the Court that to date has provided in excess of 50% recovery to allowed unsecured creditors and recovery is expected to be near 100%.
Members of the firm represented the Official Committee of Unsecured Creditors in the Chapter 9 bankruptcy filed by this Hospital District. Prior to the Committee’s hiring of the firm, the bankruptcy had continued for 11 months without a plan of reorganization being proposed. After the firm began its representation of the Committee, a negotiated plan of reorganization was confirmed, resulting in a 100% recovery to unsecured creditors.
Members of the firm represented the Official Unsecured Creditors’ Committee in the case of a local steel company who filed bankruptcy shortly after a failed leveraged buy-out. The Committee reached a significant settlement with the lender and the principals for the benefit of the unsecured trade creditors after alleging a fraudulent transfer resulting from the leveraged buy-out.
Members of the firm represented the Official Unsecured Creditors’ Committee and later the Chapter 7 Trustee, and played a key role in the Bankruptcy Court’s approval of certain fraudulent transfer actions being brought against former shareholders of the company and others resulting in a distribution to unsecured creditors in an otherwise insolvent case.
Members of the firm represented the Official Unsecured Creditors’ Committee in the Chapter 11 case of a Wichita Falls lending institution. The Committee defeated the Debtor’s proposed Chapter 11 Plan, and submitted the Committee’s Creditor Plan, which was confirmed by the Bankruptcy Court and, ultimately resulted in a substantial distribution to unsecured creditors.
Attorneys in the firm have also represented Unsecured Creditors Committees in Kitty Hawk, Inc., U.S. Metro Lines, and Consul Restaurant Corporation.
777 Main Street, Suite 1550
Fort Worth, Texas 76102
500 Crescent Court, Suite 240
Dallas, TX 75201
1990 Post Oak, Suite 2400
Houston, TX 77056