Each one in plain English, with the numbers worked through for a shareholder.
7 Dec 2020bankruptcy or receivership▼ BadMajor
Lilis Energy ceased to exist: the Bankruptcy Court confirmed a liquidating Chapter 11 plan on November 17, 2020, the $46.6 million Ameredev asset sale closed December 1, and by the plan's effective date of December 4, 2020 Lilis and all its subsidiaries were dissolved, all of the company's notes, credit agreements and equity - common and preferred stock alike - were cancelled, and remaining proceeds passed to a liquidation trust for creditors. Auditor BDO confirmed its relationship with the company had simply ceased to exist, closing out the twelve-year run that began as a 2009 Nevada shell reverse merger.
16 Nov 2020asset acquisition disposition▼ BadMajor
Lilis Energy's bankruptcy ended in liquidation, not reorganization: a Section 363 auction of substantially all its assets was won by Ameredev Texas for $46.6 million, and the Bankruptcy Court approved the sale on November 13, 2020.
Lilis's DIP lenders granted a sixth extension of bankruptcy-case milestones and agreed future deadline extensions could be handled by simple email agreement - a sign the process of winding down the case, rather than any real recovery, was now the routine.
Lilis's DIP lenders extended the deadlines for court approval of the bankruptcy disclosure statement and for holding the asset auction, the fifth such extension.
Lilis's bankruptcy lenders again pushed back the deadlines for confirming and implementing a Chapter 11 reorganization plan, the fourth such DIP credit agreement extension since the June 2020 filing.
Lilis's bankruptcy lenders extended the deadline for filing an approved Chapter 11 plan of reorganization and disclosure statement, a procedural amendment to the DIP credit agreement as the asset-sale process continued.
Varde Partners - the lender and preferred-equity backer that had fueled Lilis's Permian turnaround since 2017 - declined to sponsor a new-money Chapter 11 reorganization plan, collapsing the case's dual-track strategy down to a straight sale of substantially all the company's assets under Section 363. The restructuring support agreement among the debtors, RBL lenders and Varde was mutually terminated as bidding procedures for an asset auction moved forward.
Lilis Energy and its subsidiaries (Brushy Resources, ImPetro Operating, ImPetro Resources, Lilis Operating Company and Hurricane Resources) had filed for Chapter 11 bankruptcy protection on June 28, 2020, entering a debtor-in-possession credit agreement with BMO two days later. This filing extends deadlines under that DIP facility for certain bankruptcy-court milestones - the borrowing-base death spiral that ran through 2019 and early 2020 had ended in the company's collapse into Chapter 11.
Lilis missed the final $7.75 million borrowing-base-deficiency payment due 5 June 2020, adding a payment default to breaches of its leverage and asset-coverage covenants at 31 March, unfiled financial statements and unpaid trade payables. BMO and the majority lenders granted a forbearance of just three weeks, to 26 June, and used it to liquidate the company's commodity hedges - an expected $10 million or more - against the debt, which reduces the balance but cures none of the defaults.
8 May 2020material agreement termination▼ BadMajor
Lilis walked away from its 2018 Salt Creek Midstream crude gathering agreement entirely, terminating it with no penalty - unwinding one of the infrastructure wins it had touted during its Permian buildout as the liquidity crisis deepened.
Lilis's lenders granted a much longer reprieve this time - pushing the final $7.75 million payment to June 5, 2020, waiving Q1 2020 leverage and current-ratio covenants, and delaying the spring borrowing-base redetermination itself to June 5 - buying time through the worst of the 2020 oil price collapse rather than resolving the underlying deficiency.
Lilis pushed its final $7.75 million borrowing-base-deficiency payment back another week, to April 21, as the COVID-era oil price crash deepened the company's liquidity strain.
As oil prices collapsed with the onset of COVID-19, BMO's lenders waived Lilis's year-end 2019 leverage and current-ratio covenants and its hedging requirements through mid-2020 - and pointedly waived the requirement that the company's audited financial statements arrive without a going-concern qualification, telegraphing that auditors were expected to raise going-concern doubt.
The Marlin acreage sale closed and its $17.25 million proceeds cut Lilis's borrowing-base deficiency from $25 million to $7.75 million - real progress, though the remaining balance and its tight repayment deadlines still carried default risk.
Lilis bought two more weeks on its first borrowing-base installments and lined up its funding fix: selling its northernmost Lea County, New Mexico acreage (about 1,185 undeveloped net acres) for roughly $24.9 million, with $17.25 million of that earmarked straight toward the deficiency - the company was now selling core Permian leasehold specifically to service bank debt.
13 Feb 2020listing compliance notice● NeutralMajor
NYSE American accepted Lilis's compliance plan for its stockholders'-equity and recurring-losses deficiency, giving it until May 2021 to show progress with quarterly updates - a temporary reprieve rather than a fix.
Lilis pushed its first two borrowing-base-deficiency installments back again, consolidating both onto February 18, 2020 - the same default risk still hanging over the company with no funding solution yet in place.
Lilis bought roughly two more weeks on its first two $6.25 million borrowing-base-deficiency payments, still searching for a way to fund the shortfall without triggering default.
The redetermination finally landed: BMO cut Lilis's borrowing base from $115 million to $90 million, creating a $25 million deficiency the company had to repay in four $6.25 million monthly installments starting immediately - with the bank warning that missing any installment would trigger a default. This is the borrowing-base crisis the company had spent months trying to postpone.
Lilis pushed its BMO borrowing-base redetermination back again, to mid-January 2020, while making the cure timeline for any deficiency even tighter (due the next business day rather than within 30 days) - still fully drawn on the $115 million facility with no resolution in sight.
NYSE American issued a second deficiency letter, this time over Lilis's sustained low share price, giving the company until June 2020 to fix it via a reverse split or a real price recovery.
With its BMO revolving facility fully drawn against a $115 million borrowing base and a redetermination looming, Lilis pushed the review date back and shortened its cure window for any resulting shortfall, while separately disclosing NYSE American had flagged it for a stockholders'-equity deficiency and net losses in every one of its last five fiscal years - the company was now openly weighing non-core asset sales or replacement financing just to stay current on its bank debt.
To fund the debt paydown its lender had just required, Lilis sold a 49% non-operated interest in undeveloped Winkler/Loving County acreage and an overriding royalty interest in its core acreage - both to entities affiliated with Varde Partners, its own preferred-stock and second-lien backer - for a combined $39 million, retaining repurchase rights for three years. Raising liquidity by selling assets back to its largest financial backer marked a shift from growth-by-acquisition to preserving cash.
Lilis's BMO-led revolving credit facility was redetermined down $10 million to a $115 million borrowing base, and the bank required the company to apply proceeds from asset sales (to be detailed separately) to cut outstanding borrowings to $105 million or less - the first downward borrowing-base redetermination in the company's Permian-era credit facility, with covenant terms loosened slightly to accommodate it. Joseph Daches was now signing as interim CEO in addition to his CFO role.
Lilis reported Q3 2018 production up 234% and proved reserves up 308% year-over-year (to 46.7 MMBOE) as its Permian Basin drilling program ramped, with Chairman Ronald Ormand now also serving as CEO - real operational proof the post-Brushy turnaround strategy was working, filed as an earnings release rather than the asset transaction its event type implied.
Lilis graduated to conventional bank financing: a five-year, $500 million senior secured revolving credit facility led by BMO Harris Bank, with an initial $95 million borrowing base (subject to semiannual May/November redeterminations) and $60 million drawn at closing to retire its prior $50 million first-lien facility - a real reduction in the cost and complexity of its debt stack, now subject to leverage and current-ratio covenants.
Lilis secured firm long-haul pipeline capacity to the Gulf Coast through an SCM Crude takeaway agreement, locking in 5,000-6,000 barrels/day of committed shipping and Magellan East Houston-linked pricing starting mid-2019.
