Sanchez Energy Contract Rejection, Trend of Midstream Decisions

Analyzing the Sanchez Energy contract rejection based on a recent decision in the bankruptcy case for the privately held oil and natural gas company, our most recent Americas Core Credit podcast features Reorg legal analysts Mike Legge and Sean Daly as they discuss the first in a recent trend of midstream contract rejection decisions to move beyond hypothesizing in dicta and to actually authorize the rejection of a midstream agreement despite the presence of a covenant running with the land. Bankruptcy professionals with an interest in midstream rejection issues saw notable debtor friendly trends in 2020 case law weakening both of the levers that midstream counter parties would traditionally pull for leverage in countering the rejection of agreements in bankruptcy. The Sanchez Energy contract rejection in particular was interesting because of its novelty in effectively authorizing the rejection where previous midstream rejection decisions incorporating real property covenants had not been able to. 

Click through to listen to the full podcast on Spotify, iTunes or SoundCloud for our discussion on the Sanchez Energy contract rejection decision as well as our deep dive on the prominent high yield and distressed litigations from the week of May 17, 2021.