Judge bars investors from collecting on $300 mln clerical error

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By Jim Christie

<span class="articleLocation”>A judge has crushed the hopes of a group of
investors in Ultra Petroleum Inc, a bankrupt natural
gas company, who had sought to collect a $300 million windfall
because a clerk entered a court order on the wrong date.

U.S. Bankruptcy Judge Marvin Isgur approved on Feb. 13 the
disclosures for Ultra’s plan to emerge from Chapter 11, although
his order was not put on the docket until the morning of Feb.
14. Some holders of Ultra’s notes then argued that the delay
changed the plan’s economics in their favor, until Isgur ruled
against them on Tuesday.

“I couldn’t have imagined this would be entered on the wrong
date,” Isgur said, adding that it was not clear why.

During a hurried conference call, the Houston bankruptcy
judge said all the parties expected his order to be entered on
the court’s docket the same day he approved it, not the next

The mix-up prompted some holders of Ultra’s notes to file
court papers on Monday arguing the day difference would mean the
company’s rights offering should be delayed to Wednesday from
Tuesday, as originally planned.

The delayed rights offering in turn would affect the formula
for natural gas prices used to establish Ultra’s value in its
Chapter 11 plan, reducing it to $5.5 billion from $6 billion.

That in turn would impact how noteholders would split the
equity in the reorganized company with its shareholders. At the
lower valuation the noteholders estimated they would get an
additional $303 million, according to court filings.

A group of Ultra’s shareholders argued the noteholders were
trying to “seize upon a clerical inadvertence to deprive equity
holders of hundreds of millions of dollars of value.”

Isgur said he would not change the “economics” of his order,
and the restructuring agreement behind Ultra’s disclosures, over
a clerical error. He maintained Tuesday was the opening of
Ultra’s rights offering.

Ultra plans to emerge from bankruptcy by converting $1.3
billion of its notes into stock in the reorganized company and
by raising $580 million from a rights offering.

Ultra produces gas in Wyoming, Pennsylvania and Utah, and
filed for Chapter 11 protection in April amid the worst energy
price slump in a generation.

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