Davis Polk advised an ad hoc group of senior unsecured noteholders in connection with the chapter 11 cases of Legacy Reserves, Inc. and certain of its subsidiaries (collectively, “Legacy”). Legacy’s plan of reorganization was confirmed by the Bankruptcy Court for the Southern District of Texas on November 15, 2019 and became effective on December 11, 2019. Under the plan, Legacy equitized approximately $797.2 million of principal outstanding debt and the second-lien lenders and senior unsecured noteholders agreed to invest an additional $256.3 million of new money through an $189.8 million equity commitment by the second-lien lenders and $66.5 million rights offering that was fully backstopped by the members of the ad hoc group and the second-lien lenders. The prepetition second-lien lenders and senior unsecured noteholders are receiving substantially all of the new common stock of reorganized Legacy, subject to dilution by a management incentive plan. Legacy emerges with $388 million of total debt outstanding, all of which is under a new reserve-based credit facility with an initial borrowing base of $460 million.

Legacy Reserves Inc. is an independent energy company engaged in the development, production and acquisition of oil and natural gas properties in the United States. Its current operations are focused on the horizontal development of unconventional plays in the Permian Basin and the cost-efficient management of shallow-decline oil and natural gas wells in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions.

The Davis Polk restructuring team included partner Brian M. Resnick and associates Stephen D. Piraino and Michael Pera. The corporate team included partners Stephen Salmon and Derek Dostal. The litigation team included partner Elliot Moskowitz and associate Matthew Cormack. The tax team included partner Lucy W. Farr and associate Tracy L. Matlock. Counsel Lawrence R. Plotkin provided real estate advice. Members of the Davis Polk team are based in the New York and Northern California offices.