Lilis Energy Inc. entered bankruptcy in June 2020 with a prepackaged restructuring plan that would have provided it with options that included a path to operating as a private company. 

Instead, the oil and gas company will exit into the ether after funding fell through leading it to initiate a court-supervised sales process.

In November, Ameredev Texas LLC was named as the winning bidder to acquire substantially all company assets for $46.6 million. Lilis Energy said on Dec. 2 that it had closed the sale of its Permian Basin assets in West Texas and southeastern New Mexico.

In connection with the transaction, the company terminated its registration with the U.S. Securities and Exchange Commission on Dec. 7.

Lilis Energy was a Fort Worth, Texas-based independent E&P with a roughly 20,000-acre position in the Delaware Basin of the Permian. 

Throughout 2019, Lilis struggled to generate returns and even temporarily suspended drilling and completion operations toward the end of the second quarter. Despite reporting improved operational efficiencies and G&A cost savings in its third-quarter 2019 results, by late last year, the company said it had hired Barclays Capital Inc. as financial adviser to explore strategic alternatives. 

In January 2020, Lilis missed payments on its revolving credit agreement resulting in a borrowing base deficiency. In response, the company sold off some Permian Basin acreage in New Mexico’s Lea County to fund repayment of a “substantial portion” of its borrowing base deficiency. However, the company was unable to make the final payment of $7.75 million due June 5, 2020 and entered into forbearance.

Lilis had received a commitment from its bank lenders under its credit agreement to provide up to $15 million in debtor-in-possession (DIP) financing.

The restructuring plan was contingent on Värde Funds’ election to provide by mid-August an agreed equity commitment and additional DIP financing. Ultimately, that funding fell through.

Vinson & Elkins LLP served as legal adviser to the company, Barclays Capital served as investment banker for the company, and Opportune LLP served as restructuring adviser. Bracewell LLP served as legal adviser to Ameredev.

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