Case KG Doc 210 Filed 02/18/16 Page 1 of 20. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11

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1 Case KG Doc 210 Filed 02/18/16 Page 1 of 20 In re IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 PARALLEL ENERGY LP, et al. Debtors. 1 Case No (KG) (Jointly Administered) Hearing Date: 10:00 AM Obj. Deadline: 4:00 PM Related D.I.: 12, 82, 181 MOTION OF THE DEBTORS FOR ENTRY OF AN ORDER PURSUANT TO SECTIONS 105(a), 305(a), AND 1112(b) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 1017 AUTHORIZING DISMISSAL OF THE DEBTORS CASES UNDER CERTIFICATION OF COUNSEL Parallel Energy LP and Parallel Energy GP LLC, as debtors and debtorsin-possession (collectively, the Debtors ), file this Motion of the Debtors for Entry of an Order Pursuant to Sections 105(a), 305(a), and 1112(b) Authorizing Dismissal of the Debtors Cases Under Certification of Counsel (the Motion ): PRELIMINARY STATEMENT 1. As described in the Sale Motion, 2 the Debtors negotiated a sale of substantially all of their assets (the Sale ) to Scout Energy Group II, LP, a third-party purchaser ( Scout ). On January 12, 2016, the Court entered an order approving the 1 The Debtors in these cases and the last four digits of each Debtor s taxpayer identification number are as follows: Parallel Energy LP (9322); and Parallel Energy GP LLC (9321). The Debtors principal offices are located at 1323 E. 71st Street, Suite 200, Tulsa, OK See Motion Pursuant to 11 U.S.C. 105, 363, 365, 503 and 507 and Bankruptcy Rules 2002, 6004 and 6006 for (I) Entry of an Order (a) Establishing Bid and Auction Procedures Related to the Sale of Substantially All of the Debtors Assets; (b) Approving Related Bid Protections; (c) Scheduling an Auction and Sale hearing; (d) Establishing Certain Notice Procedures for Determining Cure Amounts for Executory Contracts and Unexpired Leases to be Assumed and Assigned; and (e) Granting Related Relief; and (II) Entry of an Order (a) Approving the Sale of Substantially All of the Debtors Assets Free and Clear of All Liens, Claims, Encumbrances and Interests; and (b) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases [D.I. 12] (the Sale Motion )

2 Case KG Doc 210 Filed 02/18/16 Page 2 of 20 sale. 3 Pursuant to the Sale Order, a portion of the Sale proceeds will be used to fund the wind-down of the Debtors estates and the closure of the Chapter 11 Cases (as defined below) in accordance with a wind-down budget prepared by the Debtors and acceptable to the Prepetition Agent and Required Lenders. 4 The Debtors now seek to effectuate an efficient and fair resolution of these Chapter 11 Cases through a dismissal, maximizing the recovery for as many creditors as possible under the circumstances. 2. By this Motion, the Debtors respectfully request that this Court enter an order substantially in the form attached as Exhibit A, authorizing the dismissal of these Chapter 11 Cases under Certification of Counsel after the distribution of the Sale proceeds and the payment or resolution of allowed, known, and valid administrative expenses and professional fees. As more fully explained herein, the Debtors believe dismissal of these Chapter 11 Cases is warranted because a dismissal will provide (a) better treatment to creditors than conversion to cases under chapter 7 and (b) an orderly end to these Chapter 11 Cases. 3. On January 28, 2016, the Sale to Scout closed and the Debtors substantially disposed of all of their assets. As a result, the Debtors have no business to reorganize and nothing of value left in the Debtors estates that warrants the continuation of these Chapter 11 Cases. Through dismissal, the Debtors seek to minimize the accrual 3 See Order (a) Authorizing and Approving the Sale of Substantially All of Debtors Assets to Scout Energy Group II, LP in Accordance with the Terms of the Purchase and Sale Agreement Free and Clear of All Liens, Claims, Encumbrances, and Other Interests, (b) Approving the Assumption and Assignment of the Assumed Contracts, and (c) Granting Related Relief [Docket No. 181] (the Sale Order ). 4 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Sale Order or the Final Order (I) Authorizing Debtors to Obtain Postpetition Financing Pursuant to Section 364 of the Bankruptcy Code, (II) Authorizing the Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III) Granting Adequate Protection to the Prepetition Secured Parties Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code, (IV) Granting Liens and Superpriority Claims, and (V) Modifying the Automatic Stay [D.I. 82] (the Final DIP Order ), as applicable. 2

3 Case KG Doc 210 Filed 02/18/16 Page 3 of 20 of additional administrative expenses and ensure an orderly conclusion to these Chapter 11 Cases. The Debtors believe that the alternative to dismissal conversion of these Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code is unwarranted because such conversion would create an additional layer of administrative expenses that may not be satisfied and leave accrued Chapter 11 administrative expenses unpaid. RELIEF REQUESTED 4. The Debtors request entry of an order substantially in the form attached as Exhibit A (the Dismissal Procedures Order ) (a) approving a form of order (the Dismissal Order ), substantially in the form attached as Exhibit 1 to the Dismissal Procedures Order, for the dismissal of the Debtors Chapter 11 Cases, (b) authorizing dismissal of these Chapter 11 Cases by submission of the form of Dismissal Order under Certification of Counsel after the Debtors distribute the Sale proceeds and satisfy, resolve, or otherwise settle all allowed, known, and valid administrative expenses, including allowed professional fees, and (c) authorizing each Debtor to take all reasonably necessary steps to dissolve under applicable law. JURISDICTION AND VENUE 5. This Court has jurisdiction over this matter pursuant to 28 U.S.C and 157 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, This matter is a core proceeding pursuant to 28 U.S.C. 157(b) and Venue of this case is proper in this District pursuant to 28 U.S.C. 3

4 Case KG Doc 210 Filed 02/18/16 Page 4 of The statutory predicate for the relief requested in this Motion are Sections 105(a), 305(a)(1), and 1112(b) of title 11 of the United States Code (the Bankruptcy Code ) and Rule 1017 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). 8. Pursuant to Rule (f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the Local Rules ), the Debtors consent to the entry of a final judgment or order with respect to this Motion if it is determined that the Court would lack Article III jurisdiction to enter such final order or judgment absent consent of the parties. PROCEDURAL BACKGROUND 9. On November 9, 2015 (the Petition Date ), the Debtors each filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code, thereby commencing their bankruptcy cases (collectively, the Chapter 11 Cases ). 10. Since the Petition Date, the Debtors have continued to operate and manage their businesses as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. 11. The Office of the United States Trustee (the U.S. Trustee ) has not appointed an official committee of unsecured creditors in these Chapter 11 Cases. RELEVANT FACTUAL BACKGROUND 12. Parallel Energy LP (the LP ) and Parallel Energy GP LLC (the GP ) are oil and gas businesses engaged in acquiring, owning, developing, and operating long-life oil and natural gas properties in Texas and Oklahoma. 4

5 Case KG Doc 210 Filed 02/18/16 Page 5 of The Debtors oil and gas interests in Texas are located in the West Panhandle Field, the Cargray Area and the SE Roberts Area. With approximately 400 operated active wells, the Texas region accounts for substantially all of the Debtors interest and production of natural gas, natural gas liquids and condensate. In Garfield and Jefferson Counties, Oklahoma, the Debtors own a small number of non-operated horizontal wells which account for approximately 1% of the Debtors estimated total production. 14. The Debtors were established under the laws of Delaware and their corporate offices are in Tulsa, Oklahoma. 15. The GP is a Delaware limited liability company and the general partner of the LP. The GP is authorized to conduct, manage, and direct all of the activities of the LP. Parallel Energy Commercial Trust (the Commercial Trust ) owns the GP and serves as its sole member. The LP is a Delaware limited partnership owned % by the Commercial Trust and.001 by the GP. The Commercial Trust is an Alberta, Canada legal entity. 16. The Commercial Trust and two other Canadian entities related to the Debtors, Parallel Energy Trust and Parallel Energy Inc., have filed applications seeking relief under the Companies Creditors Arrangement Act of Canada. 17. Additional information about the Debtors businesses, capital structure and the circumstances leading to the commencement of these Chapter 11 Cases can be found in the Declaration of Richard N. Miller in Support of the Debtors Chapter 11 Petitions and Request for First Day Relief [D.I. 15], filed on the Petition Date. 5

6 Case KG Doc 210 Filed 02/18/16 Page 6 of On December 2, 2015, this Court entered the DIP Order, which, among other things, granted (a) the DIP Liens and the DIP Superpriority Claims to the DIP Secured Parties, and (b) the Prepetition Adequate Protection Liens and the Prepetition Adequate Protection Superpriority Claims to the Prepetition Secured Parties. The DIP Facility was paid in full on January 28, As more fully described in the Sale Motion and the Sale Order, the Debtors conducted a thorough marketing and sales process aimed at selling substantially all of their assets (the Assets ) with the goal of maximizing the value of their estates and the Sale Order has been entered. 20. To address the risk of the estates administrative insolvency, pursuant to the Sale Order, the Sale proceeds are to be distributed as follows: first, to the DIP Agent for application in accordance with the DIP Loan Documents and the Final DIP Order until the DIP Obligations are Paid in Full; second, to a segregated account held by the DIP Agent or such other bank acceptable to the U.S. Trustee and the DIP Agent in an amount equal to (a) unpaid expenses in the Approved Budget; (b) the approved amounts in the KEIP/KERP Order [D.I. 162] 5 ; and (c) the transaction fee approved in the Evercore Employment Order [D.I. 133] 6 (collectively, the Wind- Down Holdback ) to fund the wind-down of the Debtors estates and the closure of the Chapter 11 Cases in accordance with a wind-down budget prepared by the Debtors and acceptable to the DIP Agent and the Required Lenders, and third, to the Prepetition Agent for application in accordance with the Prepetition Loan Documents and the Final DIP Order until the Prepetition Credit Obligations are Paid in Full and the Debtors obligations in connection with the Prepetition Secured Parties Adequate Protection are satisfied. Sale Order at See Order Approving Motion of the Debtors for an Order Authorizing and Approving Implementation of Key Employee Incentive Program and Key Employee Retention Program Pursuant to Sections 363(B), 503(B), And 503(c) of the Bankruptcy Code. 6 See Order Authorizing the Debtors to Retain and Employ Evercore Group L.L.C. as Investment Banker Effective Nunc Pro Tunc to the Petition Date. 6

7 Case KG Doc 210 Filed 02/18/16 Page 7 of The Closing of the Sale occurred on January 28, Therefore, the Debtors have no business to reorganize and nothing of value left in the Debtors estates that warrants the continuation of these Chapter 11 Cases. 22. Concurrently with the sale process, the Debtors, in consultation with the Prepetition Agent, have been exploring alternatives to facilitate the orderly wind-down of the remainder of the Debtors estates and the Debtors exit from chapter 11. In exploring these alternatives, the Debtors have concluded that all property of the estate is encumbered, the allowed claims of the Prepetition Secured Parties, which are secured by such property, exceed, by a wide margin, the value of such property, and absent consent of the Prepetition Agent and the other Prepetition Secured Parties, no plan of reorganization can be confirmed. Likewise, the Debtors believe that conversion of these Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code would only result in an increase in administrative expenses for which there are no funds to pay, absent consent of the Prepetition Agent and the other Prepetition Secured Parties. PROCEDURES FOR DISMISSAL 23. The Dismissal Procedures Order and the form of Dismissal Order contemplate the dismissal of the Chapter 11 Cases upon the filing of a Certification of Counsel certifying that all preconditions to dismissal have been completed, including the payment, resolution, or other settlement of allowed, known, and valid administrative expenses and allowed professional fees of the Debtors, as provided in the Approved Wind-Down Budget (as defined below). 24. The relevant terms of the Dismissal Procedures Order are as follows: 7

8 Case KG Doc 210 Filed 02/18/16 Page 8 of 20 a. Continuation of Liens. As of the Closing Date of the Sale, the Prepetition First Priority Liens, and the Prepetition Adequate Protection Liens shall be deemed to have attached to the proceeds of the Sale, including those proceeds allocated to Wind-Down Holdback pursuant to the Sale Order. b. Wind-Down Budget. Attached as Exhibit 2 to the Dismissal Procedures Order will be a cash flow budget (the Approved Wind-Down Budget ), which reflects on a line-item basis the Debtors (i) weekly projected cash receipts, if any, and (ii) weekly projected disbursements (including ordinary course operating expenses, bankruptcy-related expenses under the Chapter 11 Cases, estimated fees and expenses of the DIP and Prepetition Agent (including counsel and financial advisors therefor), any other fees and expenses relating to the DIP Facility, and all other wind-down expenses). 7 Commencing on the first Wednesday following the date of entry of the Dismissal Procedures Order and continuing every Wednesday thereafter (or if such Wednesday is not a Business Day, the following Business Day) (i.e., every week), the Debtors shall prepare and deliver to the Prepetition Agent a Variance Report (as defined in the DIP Credit Agreement), in form acceptable to the Prepetition Agent and Required Lenders, setting forth (i) the actual cash receipts (if any) and actual expenditures for each line item in the Approved Wind-Down Budget covering the previous calendar week and comparing the foregoing amounts with the budgeted cash receipts (if any) and budgeted expenditures, respectively, set forth in the budget for such line item during such one week period, and (ii) the sum of weekly unused availability under the Wind-Down Holdback plus any unrestricted cash on hand. The Variance Report shall include an explanation as to any variance identified in such report in accordance with the foregoing. Such explanation shall include, among other things, whether such variance is permanent or relates solely to timing and, to the extent related to timing, when such variance is expected to be corrected. Notwithstanding anything to the contrary in the Dismissal Procedures Order or the DIP Order, the reasonable professional fees, costs and expenses of the DIP Agent s advisors and the Prepetition Agent s advisors, respectively, shall be due, payable and paid in accordance with the terms of the DIP Order notwithstanding any budgeted amounts for such fees, costs and expenses set forth in the Approved Wind-Down Budget. Unless otherwise agreed to in writing by the Prepetition Agent, the Debtors shall only expend Cash Collateral proceeds in accordance with the specific purposes, and at the specific time periods, set forth in the Approved Wind-Down Budget (and in the case of the costs and expenses of the DIP Agent and Prepetition Agent, in accordance with the DIP Loan Documents and the DIP Order). The DIP Agent, the other DIP Secured Parties, and the Prepetition Secured Parties shall have no obligation to fund any wind-down or other expenses or disbursements or to permit the use of Cash Collateral with respect thereto, unless permitted under the Approved Wind-Down Budget. 7 The DIP has been paid in full, the DIP liens have been released, and related UCC-3 terminations have been filed. Fees and expenses, if any, may be due and owing the DIP Agent, but the Debtors are unaware of any outstanding amounts at the time of this filing. 8

9 Case KG Doc 210 Filed 02/18/16 Page 9 of 20 c. Preconditions to Dismissal. Under the Dismissal Procedures Order and the form of Dismissal Order, the Debtors would seek entry of the Dismissal Order through a Certification of Counsel that certifies that the Debtors have (a) disposed of their remaining de minimis assets; (b) satisfied, resolved, or otherwise settled allowed, known, and valid administrative expenses, including all professionals fees and expenses, pursuant to the Approved Wind-Down Budget and Claims Resolution Process; and (c) distributed all remaining funds to the Prepetition Agent pursuant to the Sale Order (collectively, the Preconditions to Dismissal ). d. Claims Resolution Process. The Approved Wind-Down Budget funds the orderly wind-down of these estates, and provides for the satisfaction, resolution, or other settlement of allowed and valid administrative expenses and professional fees. The payment of the amounts listed in the Approved Wind- Down Budget (the Wind-Down Expenses ) shall be deemed to be in full satisfaction of the claims alleged to be held by the recipients of the Wind-Down Expenses (the Wind-Down Claimants ); provided, however, that all accrued quarterly fees arising under 28 U.S.C must be paid in full to the U.S. Trustee s Office notwithstanding any limitations in the Approved Wind-Down Budget. No other distributions will be made to the Debtors creditors or interestholders. Accordingly, upon entry of the Dismissal Order, the Wind-Down Claimants and all other creditors would conclusively, absolutely, unconditionally, irrevocably and forever, release and discharge the Debtors and the Debtors current and former affiliates, subsidiaries, officers, directors, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, from any and all claims, obligations, rights, suits, damages, causes of action, remedies and liabilities whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise. The following procedures shall govern the reconciliation, resolution and allowance of all claims asserted against the Debtors and the distributions to be made to holders of such claims (the "Claims Resolution Process"): 1. Notice. No later than seven (7) business days after the filing of the Dismissal Procedures Order, counsel to the Debtor shall serve the Motion and exhibits, including the Approved Wind-Down Budget, on all known claimants of these Estates (the Claimants ). 2. Claim Disputes. If a Claimant or other party-in-interest (a) disputes the amount they are to be paid under the Approved Wind- Down Budget or (b) wishes to receive payment on account of a claim that is not reflected on the Approved Wind-Down Budget, such Claimant or other party (each an "Objecting Party", and collectively, the Objecting Parties ) shall first contact counsel for the Debtors informally 8 and attempt to resolve its dispute 8 Debtors Counsel should be contacted by at demetra.liggins@tklaw.com or by phone at (713)

10 Case KG Doc 210 Filed 02/18/16 Page 10 of 20 amicably, without the need to file a formal Claim Objection, as defined in paragraph 24(d)(3) below. In the event the dispute is unresolved, the Objecting Party shall file an objection as set forth in paragraph 24(d)(3). 3. Objection Deadline. If the Debtors and an Objecting Party are unable to informally resolve a dispute, the Objecting Party shall be required to file an objection with this Court, together with documentation supporting its objection (each a Claim Objection ) on or before 4:00 p.m. EST on April 4, 2016 (the Objection Deadline ) and serve such Claim Objection on counsel for the Debtors, counsel for the Prepetition Agent, and the U.S. Trustee by the Objection Deadline. In any Claim Objection, the Objecting Party must (a) state the grounds for its objection clearly and with particularity, (b) identify the party asserting a right to payment and the amount claimed to be owed, and (c) if the Objecting Party has not previously filed a proof of claim, attach any supporting documentation that they would otherwise attach to a proof of claim. Any Claimant or other interested party who does not timely file a Claim Objection shall be barred from (a) subsequently asserting a claim against the Debtors, (b) challenging the proposed amounts set forth in the Approved Wind-Down Budget, or (c) otherwise interfering with the approval and distribution of the funds pursuant to the Approved Wind-Down Budget. 4. Claims Hearing. Debtors counsel shall be authorized to resolve any Claim Objection without further order of the Court. If Debtors counsel and the Objecting Party cannot agree on a resolution, an omnibus hearing to consider such Claim Objection(s) will be held, subject to the Court s availability, on April 11 at :.m. EST (the Claims Hearing ). 5. Waiver of Omnibus Claim Objection Rules. The requirements of Bankruptcy Rule 3007 and Local Rule , with regard to claims objections and omnibus claims objections, are waived to the extent inconsistent with the Claims Resolution Process. 6. Professional Fees. Professionals shall submit final fee applications in accordance with the Bankruptcy Code, Bankruptcy Rules, Local Rules, and Fee Procedures Order (the Final Fee Applications ) by no later than May 20, Notwithstanding the amounts budgeted for professionals fees in the Approved Wind-Down Budget, professionals shall not be compensated for any amount in excess of the amount of fees and expenses that are approved and allowed by the Court in such Final Fee Applications. 25. The relevant terms of the Dismissal Order are as follows: 10

11 Case KG Doc 210 Filed 02/18/16 Page 11 of 20 a. Releases. Upon the entry of the Dismissal Order, to the fullest extent authorized by applicable law, for the good and valuable consideration provided by each of (a) the Debtors, (b) the DIP Secured Parties, (c) the Prepetition Secured Parties and (d) with respect to each of the foregoing entities in clauses (a) through (c), such person s current and former affiliates, subsidiaries, officers, directors, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, in each case in their capacity as such (collectively, the Released Parties ), the Released Parties are deemed released and discharged by the Debtors and their creditors from any and all claims, debts, demands, interests, obligations, rights, suits, damages, causes of action, judgments, orders, remedies, and liabilities whatsoever, including any derivative claims, asserted on behalf of the Debtors, or creditors, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Debtors, their creditors, their estates, or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any claim or equity interest or other entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the management and/or administration of the Debtors, the Debtors restructuring, the Chapter 11 Cases, the Sale, the business or contractual arrangements between the Debtors and any Released Party, the restructuring of claims and interests prior to or during these Chapter 11 Cases, the negotiation, formulation, or preparation of the DIP Loan Documents or any related agreements, instruments, or other documents, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the dismissal of the Chapter 11 Cases, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes fraud, willful misconduct, or gross negligence. b. Dissolution of the Debtors. Each Debtor, immediately prior to, upon, or after dismissal of the Chapter 11 Cases, is authorized to take all reasonably necessary steps to dissolve under applicable law. BASIS FOR RELIEF REQUESTED a. The Dismissal Should Be Approved Because an Orderly End to These Chapter 11 Cases Is in the Best Interests of Creditors and the Debtors Estates. 26. Section 105(a) of the Bankruptcy Code provides, in pertinent part, that [t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]. 11 U.S.C. 105(a). 27. Section 1112(b) of the Bankruptcy Code provides that a court may dismiss a chapter 11 case for cause. 11 U.S.C. 1112(b). Section 1112(b)(1) states, in 11

12 Case KG Doc 210 Filed 02/18/16 Page 12 of 20 relevant part, that on request of a party in interest, and after notice and a hearing, the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause. Id. Whether cause exists is determined on a case-by-case basis, and the decision to dismiss a chapter 11 case rests in the sound discretion of the court. See In re Preferred Door Co., 990 F.2d 547, 549 (10th Cir. 1993) (noting that the bankruptcy court has broad discretion to dismiss a bankruptcy case for several causes, including the debtor s inability to effectuate a plan); In re Nugelt, Inc., 142 B.R. 661, 665 (Bankr. D. Del. 1992) (stating that [c]ourts have wide latitude in determining whether cause exists to convert or dismiss a chapter 11 bankruptcy case); In re Young, 76 B.R. 376, 378 (Bankr. D. Del. 1987) (holding that section 1112(b) permits the court in its discretion to dismiss a chapter 11 case, and that the determination of whether cause has been shown must be made on a case-by-case basis). 28. Section 1112(b)(4) of the Bankruptcy Code outlines a nonexhaustive list of 16 grounds constituting cause for dismissal of a chapter 11 case. 11 U. S.C. 1112(b). One such ground is the substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation. 11 U.S.C. 1112(b)(4)(A). Significantly, courts have interpreted a reasonable likelihood of rehabilitation to refer to the debtor s ability to restore the viability of its business. Loop Corp. v. U.S. Tr., 379 F.3d 511, 516 (8th Cir. 2004) (citations omitted). Here, the Court has approved the sale of substantially all of the Debtors assets and the Sale has closed; therefore, the Debtors have no business to rehabilitate. Id. ( Because the debtors here intended to liquidate their assets rather than restore their business operations, they had no reasonable likelihood of rehabilitation. ) (internal citations omitted). 29. In addition to the non-exhaustive list outlined by section 1112(b)(4) of the Bankruptcy Code, courts may consider the totality of the circumstances in determining whether sufficient cause exists. See In re SGL Carbon 12

13 Case KG Doc 210 Filed 02/18/16 Page 13 of 20 Corp., 200 F.3d 154, 160 (3d Cir. 1999) (noting that the factors enumerated in section 1112(b)(4) are not exhaustive and... a court may consider whether other facts and circumstances qualify as cause. ). Importantly, courts may find sufficient cause if a debtor is unable to effectuate a plan or where a reasonable possibility of a successful reorganization within a reasonable period of time does not exist. In re Am. Capital Equip., LLC, 688 F.3d 145, 161, 162 n. 10 (3d Cir. 2012) (holding that the inability to effectuate a plan remains a viable basis for dismissal because the listed examples of cause [in section 1112(b)] are not exhaustive. ); see also Bronson v. Thompson (In re Bronson), 2013 WL , at *8 (B.A.P. 9th Cir. May 29, 2013) ( When it becomes apparent to the court that the debtor will not be able to confirm and effectuate a plan within the foreseeable future, the bankruptcy court should exercise its discretion under 1112(b) to dismiss or convert. ). 30. Inability to effectuate a plan arises when a debtor lacks the capacity to formulate a plan or carry one out or where the core for a workable plan of reorganization does not exist. Preferred Door, 990 F.2d at 549 (citing Hall v. Vance, 887 F.2d 1041 (10th Cir. 1989)). In this case, the Debtors are unable to satisfy their ordinary course administrative claims and, therefore, are administratively insolvent. Thus, the Debtors will be unable to confirm a chapter 11 plan. Approval of this Motion provides a consensual way for the Debtors to fund the wind-down of their estates and satisfy allowed, known, and valid administrative expenses. Furthermore, remaining in bankruptcy would only cause the Debtors to incur additional administrative expenses. 31. Once a court determines that cause exists to dismiss a chapter 11 case, the court must also evaluate whether dismissal is in the best interests of creditors and of the estate. 11 U.S.C. 1112(b); see In re Mazzocone, 183 B.R. 402, 411 (Bankr. E.D. Pa. 1995). In this case, the Debtors have sold substantially all of their Assets. Thus, the only significant remaining tasks are to distribute the Debtors remaining cash among holders of allowed, known, and valid administrative expenses pursuant to the Sale Order 13

14 Case KG Doc 210 Filed 02/18/16 Page 14 of 20 and the DIP Order. Moreover, the alternative to dismissal conversion of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code would create significant and unnecessary administrative expenses without enhancing the prospect for recoveries. Conversion is thus unwarranted and not in the best interests of creditors or the Debtors estates. Dismissal of these Chapter 11 Cases, on the other hand, will eliminate the continued accrual of any administrative expense obligations and bring closure to these Chapter 11 Cases in a timely and efficient manner. 32. Courts may consider a variety of factors in determining whether to dismiss a chapter 11 case or convert it to a chapter 7 case, including the following: a. whether some creditors received preferential payments, and whether equality of distribution would be better served by conversion rather than dismissal; b. whether there would be a loss of rights granted in the case if it were dismissed rather than converted; c. whether the debtor would simply file a further case upon dismissal; d. the ability of the trustee in a chapter 7 case to reach assets for the benefit of creditors; e. in assessing the interest of the estate, whether conversion or dismissal of the estate would maximize the estate s value as an economic enterprise; f. whether any remaining issues would be better resolved outside the bankruptcy forum; g. whether the estate consists of a single asset ; h. whether the debtor had engaged in misconduct and whether creditors are in need of a chapter 7 case to protect their interests; i. whether a plan has been confirmed and whether any property remains in the estate to be administered; and j. whether the appointment of a trustee is desirable to supervise the estate and address possible environmental and safety concerns. 14

15 Case KG Doc 210 Filed 02/18/16 Page 15 of 20 See, e.g., In re Ramallo Bros. Printing Inc., No , 2015 WL (Bankr. D.P.R. Jun. 22, 2015) (citing In re Costa Bonita Beach Resort, 513 B.R. 184 (Bankr. D.P.R. 2014); In re Helmers, 361 B.R. 190, 196 (Bankr. D. Kan. 2007). 33. A number of these factors weigh in favor of dismissal of the Debtors Chapter 11 Cases. First, the Debtors will not file a further case upon dismissal to the contrary, the Debtors plan to utilize a dismissal to effectuate an orderly wind-down of their businesses. Second, while a chapter 7 trustee might be able to do what the Debtors would do pursuant to the relief requested in this Motion, conversion to chapter 7 and appointment of a trustee would, potentially, diminish distributions on account of accrued and unpaid administrative expenses and would add an additional layer of administrative expenses that would be unnecessary and that would, potentially, go unpaid. Finally, a dismissal will maximize the value of the Debtors estates by minimizing the amount of wind-down costs, while avoiding the expense and delay associated with a chapter 7 conversion or a chapter 11 reorganization. The dismissal of these Chapter 11 Cases would provide a fair and reasonable outcome that is in the best interests of the Debtors estates. 34. Courts also consider the preferences expressed by the creditors themselves in determining what is in their best interests. See, e.g., In re Camden Ordnance Mfg. Co. of Ark., Inc., 245 B.R. 794, 802 (E.D. Pa. 2000) (approving creditors request to convert case and noting that creditors are the best judge of their own best interests ). Here, the one substantial remaining creditor constituency holding economic interests in the outcome of the Debtors Chapter 11 Cases have agreed to the dismissal of the Chapter 11 Cases and the use of their cash collateral without an offer of adequate 15

16 Case KG Doc 210 Filed 02/18/16 Page 16 of 20 protection to fund the wind-down, an agreement they would not have made unless it was in their best interests under the circumstances and, on information and belief, one such creditors will not make if the cases are converted or wound down in some other fashion. 35. Because no business is left to reorganize now that the Sale has closed, and because the factors in favor of dismissal outweigh those in favor of conversion, the Debtors have met their burden of proof to show cause exists to dismiss their Chapter 11 Cases under section 1112(b) of the Bankruptcy Code. Under these circumstances, authorizing dismissal as contemplated by this Motion will allow for the implementation of a solution that maximizes the Debtors remaining value. a. In the Alternative, the Debtors Request that These Chapter 11 Cases Be Dismissed Under Section 305(a) of the Bankruptcy Code. 36. Section 305(a) of the Bankruptcy Code permits dismissal at any time if the interests of creditors and the debtor would be better served by such dismissal. 11 U.S.C. 305(a)(1). Dismissal under Section 305(a) requires that both creditors and debtors benefit from the dismissal, rather than applying a simple balancing test to determine whether dismissal is appropriate. See In re Globao Comunicacoes e Participacoes S.A., 317 B.R. 235, 255 (Bankr. S.D.N.Y. 2004) (citing In re Eastman, 188 B.R. 621 (9th Cir. B.A.P. 1995)). For the reasons previously set forth herein, dismissal is not only in the interest of the Debtors, but in the interests of their creditors. The Debtors would be relieved of the expenses that would accrue if they lingered in chapter 11 for an indefinite period. Additionally, the Debtors main creditor constituency favors a dismissal. Dismissal of these Chapter 11 Cases is contemplated as part of the Sale Order. Moreover, holders of allowed, known, and valid administrative expenses, who otherwise would not be entitled to a recovery due to the Prepetition Adequate Protection 16

17 Case KG Doc 210 Filed 02/18/16 Page 17 of 20 Superpriority Claims, will have their expenses paid in full. Thus, a dismissal enables the Debtors to maximize the possible recovery for priority creditors and will further ensure no unnecessary diminution in value of the estates by continuing in the chapter 11 process and accumulating further administrative and professional expenses. b. A Dismissal is Both Permissible and Appropriate in These Chapter 11 Cases. 37. The requested dismissal is akin to a simple dismissal of these Chapter 11 Cases. Other than dismissal, the proposed form of Dismissal Order provides for (a) a provision ensuring that prior orders of this Court survive dismissal of these Chapter 11 Cases, including the Sale Order, (b) the ability of the Debtors to dissolve, and (c) certain consensual releases. None of the relief sought is controversial or unusual. Even if, however, the dismissal sought herein constitutes a structured dismissal, it is both permissible and appropriate. See Official Comm. of Unsecured Creditors v. CIT Grp./Business Credit Inc. (In re Jevic Holding Corp., et al.), 787 F.3d 173, 181 (3d Cir. 2015); see also Endeavour Operating Corp., Case No (KJC) (Bankr. D. Del. Dec. 7, 2015) [Docket No. 1088]. As the Third Circuit explained in its recent holding in In re Jevic Holding Corporation, et al., structured dismissals are simply dismissals that are preceded by other orders of the bankruptcy court, including orders approving settlements and granting releases, and that the Bankruptcy Code does not strictly require dismissal of a chapter 11 case to be a hard reset. Id.at 181. Additionally, absent a showing that the Debtors are using a structured dismissal to circumvent the procedural protections and safeguards of the plan confirmation or conversion processes, a bankruptcy court has the discretion to order such a disposition. Id. 17

18 Case KG Doc 210 Filed 02/18/16 Page 18 of In this case, dismissal is appropriate because the Debtors are not using the process to evade either plan confirmation or conversion. With respect to plan confirmation, as explained throughout this Motion, the Debtors are unable to propose a confirmable plan because they are currently unable to satisfy their administrative claims in full, and given that the Sale has closed, no business is left to reorganize. The Debtors are only using a dismissal to resolve their allowed, known, and valid administrative expenses and professional fees and effectuate the dissolution of the Debtors immediately prior to, upon, or after the dismissal of the Chapter 11 Cases. Likewise, the Debtors are not using a dismissal to evade conversion. Rather, they are pursuing a dismissal as an alternative to conversion, one that is in the best interests of both their estates and their creditors because it avoids a time-consuming chapter 7 process that will only create administrative expenses in addition to those the Debtors are already unable to pay. For these reasons, dismissal of these Chapter 11 Cases is not only permissible, it is the option most likely to provide the maximum recovery to as many creditors as possible at minimum expense. Accordingly, the Debtors believe that the dismissal described herein is the best alternative for these estates. NOTICE 39. Due and proper notice of the Motion shall be provided to the following parties (the Notice Parties ): (a) the Office of the U.S. Trustee; (b) the Debtors twenty-five (25) largest unsecured creditors; (c) the Debtors pre-petition lenders; (d) the Prepetition Agent; (e) all parties asserting a security interest in the assets of the Debtors to the extent reasonably known to the Debtors; (f) various federal, state, county and city tax and regulatory authorities; (g) the local office for the Internal 18

19 Case KG Doc 210 Filed 02/18/16 Page 19 of 20 Revenue Service; and (h) all parties requesting notice pursuant to Bankruptcy Rule The Debtors respectfully submit that no further notice of this Motion is required. WHEREFORE, the Debtors respectfully request that this Court (i) enter an order, substantially in the form attached as Exhibit A, (a) approving a form of Dismissal Order substantially in the form attached as Exhibit 1 to Exhibit A for the dismissal of the Debtors Chapter 11 Cases; (b) authorizing dismissal of these Chapter 11 Cases by submission of the form of Dismissal Order under Certification of Counsel after the Debtors (1) dispose of their remaining de minimis assets and (2) satisfy, resolve, or otherwise settle allowed, known, and valid administrative expenses and allowed professional fees pursuant to the Approved Wind-Down Budget; and (c) authorizing each Debtor to take all reasonably necessary steps to dissolve under applicable law; and (ii) granting such other and further relief as it deems just and proper. Dated: February 18, 2016 Wilmington, DE BAYARD, P.A. /s/ Evan T. Miller Neil B. Glassman (No. 2087) GianClaudio Finizio (No. 4253) Evan T. Miller (No. 5364) 222 Delaware Avenue, Suite 900 Wilmington, DE Tel: (302) Fax: (302) nglassman@bayardlaw.com gfinizio@bayardlaw.com emiller@bayardlaw.com and 19

20 Case KG Doc 210 Filed 02/18/16 Page 20 of 20 THOMPSON & KNIGHT LLP Demetra L. Liggins (admitted pro hac vice) Three Allen Center 333 Clay Street, Suite 3300 Houston, TX Tel: (713) Fax: (832) THOMPSON & KNIGHT LLP David M. Bennett (admitted pro hac vice) One Arts Plaza 1722 Routh Street, Suite 1500 Dallas, TX Tel: (214) Fax: (214) Counsel for the Debtors 20

21 Case KG Doc Filed 02/18/16 Page 1 of 2 In re IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 PARALLEL ENERGY LP, et al. Debtors. 1 Case No (KG) (Jointly Administered) Hearing Date: 10:00 AM Obj. Deadline: 4:00 PM NOTICE OF MOTION AND HEARING PLEASE TAKE NOTICE that on February 18, 2016, Parallel Energy LP and Parallel Energy GP LLC, as debtors and debtors-in-possession (collectively, the Debtors ) filed the Motion of the Debtors for Entry of an Order Pursuant to Sections 105(a), 305(a) and 1112(b) of the Bankruptcy Code and Bankruptcy Rule 1017 Authorizing Dismissal of the Debtors Cases Under Certification of Counsel (the Motion ) with the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court ). PLEASE TAKE FURTHER NOTICE that objections or responses to the Motion, if any, must be made in writing, filed with the Bankruptcy Court, and served so as to be received by the undersigned attorneys for the Debtors on or before 4:00 p.m. EST on March 3, 2016 (prevailing Eastern Time). PLEASE TAKE FURTHER NOTICE that a hearing with respect to the Motion, if required, will be held before The Honorable Kevin Gross at the Bankruptcy Court, 824 North Market Street, 6th Floor, Courtroom No. 3, Wilmington, Delaware on March 10, 2016 at 10:00 a.m. EST (prevailing Eastern Time). 1 The Debtors in these cases and the last four digits of each Debtor s taxpayer identification number are as follows: Parallel Energy LP (9322); and Parallel Energy GP LLC (9321). The Debtors principal offices are located at 1323 E. 71st Street, Suite 200, Tulsa, OK

22 Case KG Doc Filed 02/18/16 Page 2 of 2 PLEASE TAKE FURTHER NOTICE THAT, IF NO OBJECTIONS TO THE MOTION ARE TIMELY FILED, SERVED AND RECEIVED IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: February 18, 2016 Wilmington, DE BAYARD, P.A. /s/ Evan T. Miller Neil B. Glassman (No. 2087) GianClaudio Finizio (No. 4253) Evan T. Miller (No. 5364) 222 Delaware Avenue, Suite 900 Wilmington, DE Tel: (302) Fax: (302) nglassman@bayardlaw.com gfinizio@bayardlaw.com emiller@bayardlaw.com and THOMPSON & KNIGHT LLP Demetra L. Liggins (admitted pro hac vice) Three Allen Center 333 Clay Street, Suite 3300 Houston, TX Tel: (713) Fax: (832) Demetra.Liggins@tklaw.com THOMPSON & KNIGHT LLP David M. Bennett (admitted pro hac vice) One Arts Plaza 1722 Routh Street, Suite 1500 Dallas, TX Tel: (214) Fax: (214) David.Bennett@tklaw.com Counsel for the Debtors 2

23 Case KG Doc Filed 02/18/16 Page 1 of 12 Exhibit A Dismissal Procedures Order

24 Case KG Doc Filed 02/18/16 Page 2 of 12 In re IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 PARALLEL ENERGY LP, et al. Debtors. 1 Case No (KG) (Jointly Administered) Related D.I.: ORDER APPROVING (I) FORM OF ORDER PURSUANT TO SECTIONS 105(a), 305(a) AND 1112(b) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 1017 AUTHORIZING DISMISSAL OF THE DEBTORS CASES AND (II) PROCEDURES FOR SUBMISSION OF SUCH ORDER UNDER CERTIFICATION OF COUNSEL Having considered the Debtors Motion 2 for entry of an order pursuant to sections 105(a), 305(a) and 1112(b) of title 11 of the United States Code, 11 U.S.C (as amended, the Bankruptcy Code ) and Rule 1017 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), authorizing a procedure whereby the Debtors may seek dismissal of the Debtors Chapter 11 Cases under certification of counsel, the Court finds that (a) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. 157 and 1334(b); (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); (c) the relief requested in the Motion is in the best interest of all parties; (d) proper and adequate notice of the Motion and the hearing thereon has been given and that no other or further notice is necessary; and (e) upon the record herein after due deliberation thereon, good and sufficient cause exists for the granting of the relief as set forth herein. Accordingly, it is 1 The Debtors in these cases and the last four digits of each Debtor s taxpayer identification number are as follows: Parallel Energy LP (9322); and Parallel Energy GP LLC (9321). The Debtors principal offices are located at 1323 E. 71st Street, Suite 200, Tulsa, OK All capitalized terms not defined herein shall have the meaning ascribed to them in the Motion.

25 Case KG Doc Filed 02/18/16 Page 3 of 12 It is further ORDERED that the Motion is GRANTED to the extent set forth herein. ORDERED that the form of Dismissal Order is hereby APPROVED in its entirety in the form attached as Exhibit 1. Notwithstanding the foregoing, the dismissal of the Debtors Chapter 11 Cases shall remain subject to this Court s subsequent entry of the Dismissal Order. It is further ORDERED that, as of the Closing Date of the Sale, the Prepetition First Priority Liens, and the Prepetition Adequate Protection Liens are hereby deemed to have attached to the proceeds of the Sale, including those proceeds allocated to the Wind- Down Holdback pursuant to the Sale Order. It is further ORDERED that the Debtors are authorized to use the Sale Proceeds in the Wind-Down Holdback to fund the orderly wind-down of the Debtors estates solely in accordance with the Approved Wind-Down Budget attached as Exhibit 2, unless otherwise agreed to in writing by the Prepetition Agent. It is further ORDERED that the Debtors shall prepare and deliver to the Prepetition Agent a weekly Variance Report, in form acceptable to the Required Lenders, as set forth in the Motion. It is further ORDERED that the Debtors are authorized to submit to the Court under Certification of Counsel the approved form of Dismissal Order for one of more of the Debtors Chapter 11 Cases at a time. It is further ORDERED that, pursuant to sections 105(a), 305(a) and 1112(b) of the Bankruptcy Code and Bankruptcy Rule 1017, the Debtors may file the Dismissal Order 2

26 Case KG Doc Filed 02/18/16 Page 4 of 12 under Certification of Counsel, which certifies that all Preconditions to Dismissal (as defined in the Motion) have been completed. It is further ORDERED that following procedures shall govern the reconciliation, resolution and allowance of all claims asserted against the Debtors and the distributions to be made to holders of such claims (the "Claims Resolution Process"): 1. Notice. No later than seven (7) business days after the filing of this Order, counsel to the Debtor shall serve the Motion and exhibits, including the Approved Wind-Down Budget, on all known claimants of these Estates (the Claimants ). 2. Claim Disputes. If a Claimant or other party-in-interest (a) disputes the amount they are to be paid under the Approved Wind- Down Budget or (b) wishes to receive payment on account of a claim that is not reflected on the Approved Wind-Down Budget, such Claimant or other party (each an "Objecting Party", and collectively, the Objecting Parties ) shall first contact counsel for the Debtors informally 3 and attempt to resolve its dispute amicably, without the need to file a formal Claim Objection, as defined in paragraph 24(d)(3) below. In the event the dispute is unresolved, the Objecting Party shall file an objection as set forth in paragraph 24(d)(3). 3. Objection Deadline. If the Debtors and an Objecting Party are unable to informally resolve a dispute, the Objecting Party shall be required to file an objection with this Court, together with documentation supporting its objection (each a Claim Objection ) on or before 4:00 p.m. EST on April 4, 2016 (the Objection Deadline ) and serve such Claim Objection on counsel for the Debtors, counsel for the Prepetition Agent, and the U.S. Trustee by the Objection Deadline. In any Claim Objection, the Objecting Party must (a) state the grounds for its objection clearly and with particularity, (b) identify the party asserting a right to payment and the amount claimed to be owed, and (c) if the Objecting Party has not previously filed a proof of claim, attach any supporting documentation that they would otherwise attach to a proof of claim. Any Claimant or other interested party who does not timely file a Claim Objection shall be barred from (a) subsequently asserting a claim against the Debtors, (b) challenging the proposed 3 Debtors Counsel should be contacted by at demetra.liggins@tklaw.com or by phone at (713)