case 20-32021 document 679 filed in txsb on 08/03/20 page 1 … · 2020-08-03 · the court to this...

OBJECTION TO THE JOINT CHAPTER 11 PLAN OF REORGANIZATION, PAGE 1 OF 7

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re: § Chapter 11 §WHITING PETROLEUM CORPORATION, et al.,1

§ §

Case No. 20-32021 (DRJ)

§ (Jointly Administered) Debtors. §

AMENDED OBJECTION OF XTO ENTITIES TO THE JOINT CHAPTER 11 PLAN OF REORGANIZATION OF WHITING PETROLEUM CORPORATION AND ITS DEBTOR

AFFILIATES AND OBJECTION TO PROPOSED CURE AMOUNTS

TO THE HONORABLE DAVID R. JONES, UNITED STATES BANKRUPTCY JUDGE:

COME NOW XTO Energy Inc., XH LLC and XTO Holdings LLC (collectively, the “XTO

Entities”)2 and files this Amended Objection of XTO Entities to the Joint Chapter 11 Plan of

Reorganization of Whiting Petroleum Corporation and Its Debtor Affiliates and Objection to

Proposed Cure Amounts (“Objection”).

I. BACKGROUND

1. The Debtors have filed a Joint Chapter 11 Plan of Reorganization of Whiting

Petroleum Corporation and its Debtor Affiliates [Docket No. 567] (“Plan”). This document sets

forth the XTO Entities’ objection to this Plan.

2. The lead case in these administratively consolidated bankruptcy cases was filed

by Whiting Petroleum Corp. (“Whiting”). In addition, other affiliates of Whiting filed bankruptcy

cases, including Whiting Oil & Gas Corp.3 (“Whiting Oil & Gas”) and Whiting Resources Corp.

1 The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number, are: Whiting Canadian Holding Company Unlimited Liability Corporation (3662); Whiting Petroleum Corporation (8515); Whiting US Holding Company (2900); Whiting Oil and Gas Corporation (8829); and Whiting Resources Corporation (1218). The location of the debtors’ service address is: 1700 Lincoln Street, Suite 4700, Denver, Colorado 80203. 2 The term “XTO Entities” shall include XTO Energy Inc., XH LLC, XTO Holdings LLC, ExxonMobil Corporation, and Exxon Mobil Exploration Co., as well as any parent, subsidiary or affiliate of any such entities. 3 Case No. 20- 32022 (DRJ).

Case 20-32021 Document 679 Filed in TXSB on 08/03/20 of 17


(“Whiting Resources”).4 Whiting, Whiting Oil & Gas and Whiting Resources are sometimes

collectively referred to herein as the “Whiting Debtors”. The three (3) Whiting Debtors all

commenced their cases on April 1, 2020.

3. Certain of the XTO Entities act as the operators of various oil and gas properties

in which one or more of the Whiting Debtors have interests.

4. The XTO Entities maintains a series of accounts relating to the properties

operated by the XTO Entities reflecting as a credit all revenue received on account of the

interests of the Whiting Debtors, and as a debit to the account all joint interest billings (JIBs) or

other charges of expenses against that account. The accounts (collectively, the “Accounts”,

singularly an “Account”) are maintained on an entity by entity basis, netting together all items of

income and expense as to each of the Whiting Debtors.5 Based on this, credits for revenues

and debits for expenses are accrued to each Account. These are netted twice a month, once at

mid-month and once at month’s end. This yields a running tabulation of the net credits or debits

among the XTO Entities and the counterparty Whiting Debtor on each Account. This tabulation

reflects, on a cumulative basis, the net amount owed as between the XTO Entities and the

applicable Whiting Debtor as of the last day of each calendar month.

5. The Whiting Debtors commenced these bankruptcy cases on April 1, 2020. By

the petition date, the XTO Entities believe that the various items of revenues and charges for

expenses for the period ending February 29, 2020, had been netted to yield a net credit to, or

debited by, the applicable Whiting Debtor. However, the netting in relation to the Whiting

Debtors’ Accounts for the period ending March 31, 2020 was not completed as of the petition

date.

6. Below is a chart reflecting the pre-petition balances of the pre-petition Accounts

4 Case No. 20- 32023 (DRJ). 5 Smaller special accounts may be maintained as necessary for any entity, but may not be netting accounts.



among the XTO Entities and each of the Whiting Debtors as of March 31, 2020:

Counterparty Account Balance (Pre-filing) (through 03.31.2020)

Whiting Petroleum Corp. 30027477 Net: (461,038.90)

Whiting Oil & Gas Corp. 30027479*

30201802*

30272472

(147.25)

3,651.64

(1,565,335.71)

Net: ($1,561,831.32)

Whiting Resources Corp. 30127715

30234476*

(237,630.42)

1,659.35

Net: ($235,971.07)

*These three (3) Accounts are not netted Accounts.

7. The accounting for the Whiting Debtors’ Accounts runs in arrears. The latest

information available on the Accounts is as of June 30, 2020. Additional charges may trickle in

after that date, thereby potentially altering the balance of the Account as June 30, 2020.

8. Below is a second chart reflecting the current post-petition balances on the

Accounts among the XTO Entities and each of the Whiting Debtors as of June 30, 2020:

Counterparty Account Post filing balance (through 06.30.2020)



30272472

5,778.71

(42,152.83)

Net: ($36,374.12)

Whiting Resources Corp. 30127715 Net: (111,129.69)



*This is not a netted Account.

II. THE PLAN

9. The XTO Entities’ claims against the Whiting Debtors is fully secured by their

netting rights, whether such rights are in the nature of offset or recoupment, as set forth above.

The provisions of the Plan set forth below address setoffs and recoupment.

10. Article VI(G) of the Plan deals with setoffs. The final sentence of such provision

reads as follows:

Other than as permitted under the Bankruptcy Code, in no event shall any Holder of Claims be entitled to set off any such Claim against any claim, right or Cause of Action of the Debtor or Reorganized Debtor (as applicable), unless such Holder has Filed a motion with the Bankruptcy Court requesting the authority to perform such setoff on or before the Confirmation Date and notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to section 553 of the Bankruptcy Code or otherwise.

11. Article VII.E. of the Plan deals with recoupment. The final sentence of such

provision reads as follows:

In no event shall any Holder of a Claim be entitled to recoup such Claim against any claim, right, or Cause of Action of the Debtors or Reorganized Debtors, as applicable, unless such Holder actually has performed such recoupment and provided notice thereof in writing to Debtors on or before the Confirmation Date, notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of recoupment.

12. Section VII.E. is the plan injunction which provides in relevant part as follows:

Except as otherwise expressly provided in the Plan or for obligations or distributions issued or required to be paid pursuant to the Plan or the Confirmation Order, all Entities that have held, hold, or may hold Claims or Interests that have been released pursuant to the Plan, discharged pursuant to the Plan, or are subject to exculpation pursuant to the Plan, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtors, the Reorganized Debtors, or the Released Parties or the Exculpated Parties: … (iv) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any



such Claims or Interests unless such Entity has timely asserted such setoff right in a document Filed with the Bankruptcy Court explicitly preserving such setoff, and notwithstanding an indication of a claim or interest or otherwise that such Entity asserts, has, or intends to preserve any right of setoff pursuant to applicable law or otherwise; …. III. XTO ENTITIES’ MOTION FOR RELIEF FROM THE STAY

13. Certain of the XTO Entities have filed XTO’s Motion for Relief from the Automatic

Stay [Docket No. 640] (“Stay Motion”). Reference is here made to the Stay Motion for all

purposes. A copy of the Stay Motion, excluding the voluminous exhibits, is attached hereto as

Exhibit 1.

14. In the Stay Motion, the movants seek relief from the automatic stay to net the

credits (revenues) and debits (expenses) relating to the mineral interests held by the Whiting

Debtors for which the XTO Entities act as operator. The XTO Entities seek to exercise their

netting rights with respect to all debits to the Accounts, whether pre-petition or post-petition,

including those reflected in the Exhibit A and Exhibit B to the Stay Motion. The Stay Motion

seeks leave to net, whether as a setoff or recoupment, all expenses accruing to the Accounts

(as defined in the Stay Motion) through the Effective Date of the Plan.

15. The XTO Entities contend that the Stay Motion satisfies the requirements of the

Plan in relation to Article VI(G) relating to rights of setoff and Article VII.E. which is the plan

injunction to fully preserve its netting rights pursuant to the terms of the Plan whether such

rights are in the nature of setoff or recoupment. The XTO Entities further assert that the Stay

Motion also satisfies Article VII.E. by providing full and complete notice to the Whiting Debtors of

the XTO Entities netting rights to the extent these rights constitute recoupment.

IV. OBJECTION TO PLAN

16. The XTO Entities object to the Plan to the extent it seeks or purports to restrict,

limit or deprive the XTO Entities of its rights of setoff or recoupment for any expenses accrued

to the Accounts on or before the Effective Date of the Plan. These rights constitute property



interests, constituting the XTO Entities as secured creditors based on their netting rights and

such property right may not be stripped by the Plan.

17. The XTO Entities believe that the Stay Motion satisfies all requirements of the

Plan, whether appropriate or not, to properly perfect and preserve the netting rights of the XTO

Entities, whether based on setoff or recoupment. The XTO Entities are entitled to a finding from

the Court to this effect to be included in the confirmation order.

18. The Stay Motion seeks leave to net all expenses accruing in relation to the

Accounts through the Effective Date of the Plan. As set forth in the Stay Motion, the accounting

on the Accounts runs in arrears so that, as of the Effective Date, some of the expenses relating

to the Accounts will not yet be unknown. The XTO Entities object to the Plan to the extent it

purports to deprive the XTO Entities of any netting rights, whether as a setoff or recoupment, for

expenses which have accrued by the Effective Date but which have yet to be accounted for as

of the Effective Date of the Plan.

19. The XTO Entities also object to, and hereby opt out of, the Third-Party Releases

contained in Section VIII.C of the Plan.

V. OBJECTION TO PROPOSED CURE AMOUNTS

20. The XTO Entities additionally object to the proposed cure amounts as reflected in

Schedule F of the Plan Supplement [Docket No. 609] (the “Schedule of Assumed Contracts”).

The Schedule of Assumed Contracts identifies numerous executory contracts with XTO Entities,

each showing a cure claim of $0.00. As an initial matter, the Plan does not specify the effective

date of assumption for determining cure claims. The relevant date of assumption is crucial to

determining whether a monetary default exists (or will exist) under the contracts to be assumed.

Joint interest billings under JOAs, for example, are sometimes paid several months following the

production month. Moreover, the XTO Entities dispute that the cure claim for each executory

contract to be assumed is $0.00. For the reasons explained above, the cure claims for the

assumed contracts will depend in part of whether the parties continue to net accounts in the



ordinary course of business, and will additionally depend on the date set for determining the

cure costs. The XTO Entities therefore reserve all rights with respect to the contracts to be

assumed and their associated cure costs.

PRAYER FOR RELIEF

WHEREFORE, Movants pray that the Court enter an order granting the relief set forth

above and all such relief as the Court may deem just and proper.

DATED: August 3, 2020 Respectfully Submitted, /s/ J. Robert Forshey J. Robert Forshey State Bar No. 07264200 Lynda L. Lankford State Bar No. 11935020 FORSHEY & PROSTOK LLP 777 Main St., Suite 1550 Fort Worth, Texas 76102 Telephone: (817) 877-8855 Facsimile: (817) 877-4151 [email protected] [email protected] ATTORNEYS FOR THE XTO ENTITIES

CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been served upon all parties receiving electronic notice via the Court's CM/ECF system on August 3, 2020.

/s/ J. Robert Forshey J. Robert Forshey

L:\BFORSHEY\XTO- Whiting Petroleum Corp (CrR) #6096\Pleadings 20-32021\Amended Objection to Joint Ch. 11 Plan of Reorganization 8.3.20.docx


Exhibit 1


MOTION FOR RELIEF FROM THE AUTOMATIC STAY, PAGE 1 OF 9

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re: § Chapter 11 § WHITING PETROLEUM CORPORATION, et al.,1

§ §

Case No. 20-32021 (DRJ)

§ (Jointly Administered) Debtors. §

XTO’s MOTION FOR RELIEF FROM THE AUTOMATIC STAY

THIS IS A MOTION FOR RELIEF FROM THE AUTOMATIC STAY. IF IT IS GRANTED, THE MOVANT MAY ACT OUTSIDE OF THE BANKRUPTCY PROCESS. IF YOU DO NOT WANT THE STAY LIFTED, IMMEDIATELY CONTACT THE MOVING PARTY TO SETTLE. IF YOU CANNOT SETTLE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY AT LEAST SEVEN (7) DAYS BEFORE THE HEARING. IF YOU CANNOT SETTLE, YOU MUST ATTEND THE HEARING. EVIDENCE MAY BE OFFERED AT THE HEARING AND THE COURT MAY RULE. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEYS.

TO THE HONORABLE DAVID R. JONES, UNITED STATES BANKRUPTCY JUDGE:

COME NOW XTO Energy Inc., XH LLC and XTO Holdings LLC (collectively, “XTO”) and

files this XTO’s Motion for Relief from the Automatic Stay (“Motion”).

I. JURISDICTION

1. The Court has jurisdiction over this contested matter pursuant to 28 U.S.C.,

section 1334. This is a core proceeding pursuant to 28 U.S.C., section 157(G) and (O).

1The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number, are: Whiting Canadian Holding Company Unlimited Liability Corporation (3662); Whiting Petroleum Corporation (8515); Whiting US Holding Company (2900); Whiting Oil and Gas Corporation (8829); and Whiting Resources Corporation (1218). The location of the debtors’ service address is: 1700 Lincoln Street, Suite 4700, Denver, Colorado 80203.

Case 20-32021 Document 640 Filed in TXSB on 07/29/20 Page 1 of 9Case 20-32021 Document 679 Filed in TXSB on 08/03/20 of 17


II. FACTUAL BACKGROUND

A. The Whiting Debtors’ Accounts

2. The lead case in these administratively consolidated bankruptcy cases was filed

by Whiting Petroleum Corp. (“Whiting”). In addition, other affiliates of Whiting filed bankruptcy

cases, including Whiting Oil & Gas Corp.2 (“Whiting Oil & Gas”) and Whiting Resources Corp.

(“Whiting Resources”).3 Whiting, Whiting Oil & Gas and Whiting Resources are sometimes

collectively referred to herein as the “Whiting Debtors”. The three (3) Whiting Debtors all

commenced their cases on April 1, 2020.

3. XTO acts as the operator of various oil and gas properties in which one or more

of the Whiting Debtors have interests.

4. XTO maintains a series of accounts relating to the properties operated by XTO

reflecting as a credit all revenue received on account of the interests of the Whiting Debtors,

and as a debit to the account all joint interest billings (JIBs) or other charges of expenses

against that account. The accounts (collectively, the “Accounts”, singularly an “Account”) are

maintained on an entity by entity basis, netting together all items of income and expense as to

each of the Whiting Debtors.4 Based on this, credits for revenues and debits for expenses are

accrued to each Account, and are netted twice a month, once at mid-month and once at

month’s end. This yields a running tabulation of the net credits or debits among XTO and the

counterparty Whiting Debtor on each Account. This tabulation reflects, on a cumulative basis,

the net amount owed as between XTO and the applicable Whiting Debtor as of the last day of

each calendar month.

5. The Whiting Debtors commenced these cases on April 1, 2020. By the petition

date, XTO believes that the various items of revenues and charges for expenses for the period

2 Case No. 20- 32022 (DRJ). 3 Case No. 20- 32023 (DRJ). 4 Smaller special accounts may be maintained as necessary for any entity, but may not be netting accounts.



ending February 29, 2020, had been netted to yield a net credit to, or amount owing by, the

applicable Whiting Debtor on each Account. In other words, XTO believes that the netting of

revenues and expenses for the period ended February 29, 2020, was completed before the

petition date.

6. However, the netting of the Whiting Debtors’ Accounts for the period ended

March 31, 2020 was not completed as of the petition date. In this Motion, XTO seeks leave to

proceed with netting with respect to the Whiting Debtors’ Accounts for all pre-petition credits for

revenues and debits for expenses attributable to all periods through March 31, 2020, the day

before the petition date. In other words, XTO seeks relief from the stay to net against the

revenues all as yet unapplied pre-petition expenses in relation to the Accounts through March

31, 2020.

B. Pre-petition netting.

7. Below is a chart reflecting the pre-petition balances of the Accounts among XTO

and each of the Whiting Debtors as of March 31, 2020:

Counterparty Account Balance (Pre-filing)

(through 03.31.2020)



30201802*

30272472

(147.25)

3,651.64

(1,565,335.71)

Net: ($1,561,831.32)

Whiting Resources Corp. 30127715

30234476*

(237,630.42)

1,659.35

Net: ($235,971.07)

*These three (3) Accounts are not netted Accounts.



8. The amounts reflected as net above reflect the net credit payable to the

applicable Whiting Debtor for each Account as of March 31, 2020 after the netting sought by

XTO in this Motion.

9. The attached Exhibit “A” reflects debits and credits to the netting Accounts

(30027477, 30272472 and 30127715) from January 31, 2020 through March 31, 2020. As to

the non-netting Accounts (30027479, 30201802 and 30234476), all activity on each Account is

reflected in Exhibit “A”.

C. Post-petition netting.

10. The accounting for the Whiting Debtors’ Accounts runs in arrears. The latest

information available on the Accounts is as of June 30, 2020. Additional charges may trickle in

even after June 30, 2020, thereby altering the balance of the Account as of such date.

11. Below is a second chart reflecting the current post-petition balances on the

Accounts among XTO and each of the Whiting Debtors as of June 30, 2020:

Counterparty Account Post filing balance

(through 06.30.2020)



30272472

5,778.71

(42,152.83)

Net: ($36,374.12)

Whiting Resources Corp. 30127715 Net: (111,129.69)

*This is not a netted Account.

12. The post-petition transactions for which XTO seeks to net as to each Account are

reflected in the attached Exhibit “B” for the period through June 30, 2020.

13. The credits and debits to the Accounts for the periods from and after July 1, 2020

are not yet available. XTO reserves the right to amend this Motion to the extent additional post-



petition credits and debits become available for later periods. However, based on this Motion,

XTO seeks to net each account for all debits and credits from the petition date through the

effective date of the Whiting Debtors’ Plan (as defined below).

III. WHITING DEBTORS’ PLAN

14. The Whiting Debtors have filed a Joint Chapter 11 Plan of Reorganization of

Whiting Petroleum Corporation and its Debtor Affiliates [Docket No. 567] (“Plan”). Pursuant to

an Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation

Procedures with Respect to Confirmation of the Proposed Chapter 11 Plan, (III) Approving the

Forms of Ballots and Notices in Connection Therewith, (IV) Scheduling Certain Dates with

Respect Thereto, and (V) Granting Related Relief [Docket No. 576], which approved the Whiting

Debtors’ Disclosure Statement relating to the Plan, a confirmation hearing is set for August 10,

2020.

15. Article VI(G) of the Plan deals with setoffs. The final sentence of such provision

reads as follows:

Other than as permitted under the Bankruptcy Code, in no event shall any Holder of Claims be entitled to set off any such Claim against any claim, right or Cause of Action of the Debtor or Reorganized Debtor (as applicable), unless such Holder has Filed a motion with the Bankruptcy Court requesting the authority to perform such setoff on or before the Confirmation Date and notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to section 553 of the Bankruptcy Code or otherwise.

16. XTO has filed this Motion pursuant to the above provision of Article VI(G) of the

Plan seeking relief from the automatic stay to net the debits and credits on the Accounts among

XTO and the Whiting Debtors through the period ended June 30, 2020. Information relating to

the revenues and expenses from and after July 1, 2020 is not yet available. Consequently, XTO

also seeks relief from the automatic stay to exercise its netting rights for all expenses relating to

the Accounts through the effective date of the Plan, including the expenses for the period from

July 1, 2020 through the effective date of the Plan.



17. Article VII.E. of the Plan deals with recoupment. The final sentence of such

provision reads as follows:

In no event shall any Holder of a Claim be entitled to recoup such Claim against any claim, right, or Cause of Action of the Debtors or Reorganized Debtors, as applicable, unless such Holder actually has performed such recoupment and provided notice thereof in writing to Debtors on or before the Confirmation Date, notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of recoupment.

18. XTO believes that this Motion also provides proper notice of the above netting

both pre-petition and post-petition, to the extent it is deemed to constitute recoupment, all in

accordance with the above provisions of the Plan. However, as with setoff, XTO cannot provide

up-to-date recoupment information as the accounting for the Accounts runs in arrears.

Consequently, as of the Confirmation Date, there will be post-petition expenses which have not

yet been posted to the Accounts.

IV. BASIS FOR RELIEF

19. The XTO entities are entitled to relief from the automatic stay pursuant to section

362(d)(1) of the Bankruptcy Code.

20. Article A.136 of the Plan defines “Secured” to mean a claim against any of the

debtor’s property which is subject to a valid right of setoff pursuant to section 553 of the

Bankruptcy Code. To the extent the Whiting Debtors’ property is subject to setoff, this is treated

as a secured claim pursuant to section 506(a) of the Bankruptcy Code. Similarly, the term

“Collateral” is defined in Article A.33 to mean property of any of the Debtors subject to a Lien,

charge or other encumbrance or to secure payment or performance of a claim. Pursuant to

Article A.98, the term “Lien” is given the same meaning in section 101(37) of the Bankruptcy

Code, which is a charge against or interest in property to secure payment of a debt or

performance of an obligation.

21. Based upon this definitional framework, XTO’s netting rights against the various



Whiting Debtors based on the Accounts, whether based on setoff or recoupment, constitute

secured claims under the Plan. Class 1 of the Plan includes “Other Secured Claims”, a term

which appears to encompass the XTO‘s netting claim. Class 1 is unimpaired and the Plan

provides for, among other treatment, delivery of the collateral securing the claim. As such,

pursuant to the terms of the Plan, XTO would be entitled to exercise its offset rights in

satisfaction of its secured claims.

22. This Motion encompasses both pre-petition and post-petition netting between

XTO and the Whiting Debtors. Section 553 of the Bankruptcy Code expressly preserves XTO’s

right of setoff as to the pre-petition expenses in relation to each Account. However, it is well

settled that a pre-petition debt may only be offset against another pre-petition debt.

23. While section 553 does not address post-petition offsets, post-petition obligations

may be offset so long as they constitute valid, mutual obligations. 5 Collier on Bankruptcy,

§553.03 [6] (16th Ed. 2018), citing In re Alfar Dairy, Inc., 458 F.2d 1258, 1262 (5th Cir. 1972). In

Alfar Dairy, a Bankruptcy Act case, the Fifth Circuit held that a creditor’s post-petition damage

claim based on the debtor’s failure to deliver dairy products as agreed could be offset against

the debtor’s claim for dairy products sold to the creditors post-petition.

24. As held in Alfar Dairy, setoff of mutual post-petition debts is allowed, although

generally subject to the automatic stay. U.S. v. First Nat’l Bank (In re Calore Express Co.),

2000 U.S. Dist. LEXIS 19950 *22-23 (D. Mass. Oct. 31, 2000), rev’d on other grounds 288 F.3d

22 (1st Cir. 2002). While the Bankruptcy Code does not expressly address this issue, courts

generally recognize that mutual post-petition debts may be offset. Zions First Nat’l Bank, N.A. v.

Christiansen Bros. Inc. (In re Davidson Lumber Sales), 66 F.3d 1560, 1569 (10th Cir. 1995), and

the cases therein. Accord, Southeast Bank, N.A. v. Grant (In re Apex Int’l Mgmt. Servs, Inc.),

155 B.R. 591, 594-95 (Bankr. M.D. Fla. 1993), aff’d 1996 U.S. Dist. LEXIS 18820 (M.D. Fla.

1996).

25. Recoupment involves situations where the claims to be netted arise out of a



single contract or transaction. Continental Cas. Co. v. Gullett, 253, B.R. 796, 804 (S. D. Tex.

1999); In re Kosadnar, 157 F.3d 1101, 1014 (5th Cir. 1998). Other circuit courts have

characterized recoupment as applying where both debts arise out of a single transaction so that

it would be inequitable for the debtor to enjoy the benefits of that transaction without also

meeting its obligations. Malinowski v. N.Y. State Dept. of Labor, 156 F.3d 131, 132 (2nd Cir.

1998). As the Fifth Circuit similarly explained in In re Holford, 896 F.2d 176, 178 (5th Cir. 1990),

“recoupment allows a defendant to reduce the amount of a plaintiff’s claim by asserting a claim

against the plaintiff which arose out of the same transaction to arrive at a just and proper liability

on the plaintiff’s claims.”

26. Unlike setoff, recoupment is not subject to the automatic stay. Holford, 896 F2d

at 179. Pre-petition rights may be netted against post-petition rights under the doctrine of

recoupment. Beaucage v. U.S. (In re Beaucage), 334 B.R. 353, 355 (Bankr. D. Mass. 2005).

27. Cause exists here to lift the stay. The credits given to the Whiting Debtors on the

various Accounts, to the extent offset by debits for expenses, are netted against each other on a

dollar-per-dollar basis. Consequently, there is no equity in these funds to the extent they are

subject to XTO’s right of netting whether characterized as a right of setoff or recoupment.

Similarly, such funds are not essential to a reorganization and the Whiting Debtors have

provided no adequate protection to XTO other than the netting of the expenses against the

revenues.

V. MOTION FOR RELIEF FROM THE AUTOMATIC STAY

28. XTO moves the Court to grant relief from the automatic stay to authorize the

completion of all netting for all expenses incurred by each of the Whiting Debtors as to each of

the above Accounts through the effective date of the Plan. This includes leave to net any

unapplied expenses reflected in Exhibits “A” and “B”, as well as all additional expenses

arising in relation to any of the Accounts for the period from July 1, 2020 through the effective

date of the Plan.



PRAYER FOR RELIEF

WHEREFORE, Movants pray that the Court enter an order granting the relief set forth

above and all such relief as may be proper.

DATED: July 29, 2020 Respectfully Submitted, /s/ J. Robert Forshey J. Robert Forshey State Bar No. 07264200 Lynda L. Lankford State Bar No. 11935020 FORSHEY & PROSTOK LLP 777 Main St., Suite 1550 Ft. Worth, Texas 76102 Telephone: (817) 877-8855 Facsimile: (817) 877-4151 [email protected] [email protected] ATTORNEYS FOR XTO ENERGY INC., XH LLC AND

XTO HOLDINGS LLC

CERTIFICATE OF CONFERENCE

I certify that I have contacted counsel for the Debtors, Matthew Cavenaugh, regarding the above and foregoing Motion. While the Debtors cannot agree to the relief requested at this time, the parties are actively working together to reconcile the Accounts.


CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document has been served

by the Electronic Case Filing System for the United States Bankruptcy court for the Southern

District of Texas on July 29, 2020 and will be served upon the parties on the attached service list

via United States Mail, first class postage prepaid on July 29, 2020.


L:\BFORSHEY\XTO- Whiting Petroleum Corp (CrR) #6096\Pleadings 20-32021\Motion for Relief fr Automatic Stay (Final) 7.29.20.docx


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