Chapter 11 Circumstances
After months of declining gas prices, in early 2016, Azure Midstream Partners, LP (“AMP”), the public partnership, suffered a contractual default from its largest customer that severely impaired the company’s cash flow. This – in turn – drove the partnership out of compliance with its bank covenants, and led to a series of forbearances from the bank group while management began to evaluate options.
The Azure management team tackled a multi-pronged strategic initiative to dramatically reduce costs, restructure non-performing contracts and raise capital through the sale of key, non-essential assets as AMP dramatically improved the balance sheet and streamlined operations. In 2016 alone, AMP reduced debt by $55 million (from $225 million to $170 million) while Azure's commercial team continued to capture new business (despite the challenging environment).
Unfortunately, this progress failed to convince AMP’s lenders to continue taking reasonable steps toward a resolution, and in January 2017 the bank group refused to extend another forbearance. This decision forced the board and management team to file Chapter 11 on January 30, 2017.
The goal of filing for bankruptcy protection was to preserve the company’s value as a going concern as well as more than $10 million in cash, while providing additional time to maximize value for all stakeholders.
After an auction process, AMP's assets sold to Enterprise for $189 million (an increase of $37 million over the $152 million stalking horse bid).
At this time, final distributions are still being sent to creditors, and AMP’s unitholders can find all of the information pertaining to the bankruptcy process by clicking [here].