May 7, 2021Alerts

Bankruptcy Case Alert: Rule of Three: Delaware Bankruptcy Court Again Holds Debtors Can Reject Gathering Agreements

In a May 4, 2021 bench ruling, Judge Mary F. Walrath of the Bankruptcy Court for the District of Delaware held in the Nine Point Energy Holdings, Inc., et al., v. Caliber Measurement Services LLC, et al., (21-50243) adversary proceeding that the debtor-plaintiffs (“NPE”) could reject midstream gathering agreements containing dedications with their midstream service providers (“Caliber”), concluding the dedications did not contain covenants running with the land. This ruling follows two 2020 Delaware decisions reaching similar conclusions:  In re Extraction Oil & Gas, Inc. (Judge Sontchi)1 and In re Southland Royalty Co. LLC (Judge Owens).2