in the united states bankruptcy court for the...

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

) In re: ) Chapter 11 ) Quicksilver Resources Inc., et al.,1 ) Case No. 15-10585 (LSS) ) Debtors. ) Jointly Administered )

)

Hearing Date: November 3, 2015 at 10:00 a.m. (EST)

Obj. Deadline: October 27, 2015 at 4:00 p.m. (EDT)

DEBTORS’ MOTION FOR ENTRY OF AN ORDER FURTHER

EXTENDING THE EXCLUSIVE PERIODS DURING

WHICH ONLY THE DEBTORS MAY FILE A

CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF

The debtors and debtors in possession in the above-captioned chapter 11 cases

(collectively, the “Debtors”) seek entry of an order, substantially in the form attached hereto as

Exhibit A (the “Proposed Order”), extending the exclusive periods during which only the

Debtors may file a chapter 11 plan and solicit acceptances thereof. Specifically, without

prejudice to their right to request additional extension(s), the Debtors seek to further extend, for

each Debtor, the exclusive period to file a chapter 11 plan (the “Exclusive Filing Period”) by an

additional ninety days from the date of the hearing to consider this motion, i.e., through and

including February 1, 2016,2 and the exclusive period to solicit acceptance of a chapter 11 plan

(the “Exclusive Solicitation Period” and, together with the Exclusive Filing Period, the

“Exclusive Periods”) by an additional 120 days from the expiration of the Exclusive Solicitation

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: Quicksilver Resources Inc. (“QRI”) [6163]; Barnett Shale Operating LLC [0257]; Cowtown Drilling, Inc. [8899]; Cowtown Gas Processing L.P. [1404]; Cowtown Pipeline Funding, Inc. [9774]; Cowtown Pipeline L.P. [9769]; Cowtown Pipeline Management, Inc. [9771]; Makarios Resources International Holdings LLC [1765]; Makarios Resources International Inc. [7612]; QPP Holdings LLC [0057]; QPP Parent LLC [8748]; Quicksilver Production Partners GP LLC [2701]; Quicksilver Production Partners LP [9129]; and Silver Stream Pipeline Company LLC [9384]. The Debtors’ address is 801 Cherry Street, Suite 3700, Unit 19, Fort Worth, Texas 76102. 2 The Hearing to consider this motion is scheduled for November 3, 2015 at 10:00 a.m. (ET).

Case 15-10585-LSS Doc 693 Filed 10/13/15 of 19

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Period, i.e., through and including April 13, 2016.3 In support of this motion, the Debtors

respectfully state:

PRELIMINARY STATEMENT

1. By this motion, the Debtors seek a second extension of the Exclusive Periods as

set forth herein to allow them to fully implement their strategy for an orderly, value-maximizing

exit from chapter 11. As set forth on the record at the July 7, 2015 hearing (the “July 7

Hearing”) on the First Exclusivity Motion (as defined below), the Debtors spent the first one

hundred days of these cases laying the groundwork necessary to address their multiple balance

sheet and operational challenges. By the time of the July 7 Hearing, the Debtors accomplished a

great deal and were ready to meaningfully advance toward an efficient exit from chapter 11. As

indicated at that time, however, the Debtors first needed to complete several steps integral to

achieving such an exit: namely, refining their business plan and furthering negotiations with their

stakeholders and key contract counterparties.

2. In the weeks and months since the July 7 Hearing, the Debtors have done just that

by, among other things, producing an updated business plan that accounts for both realized and

potential savings, reflects the Debtors’ streamlined operations, and features multiple alternative

earnings forecasts for their United States and Canadian operations (the “Business Plan”). The

Debtors presented the Business Plan to their key creditor constituencies and held no fewer than

ten in-person meetings with both professionals and principals of the first and second lien parties

3 Pursuant to the First Exclusivity Extension Order, the Exclusive Filing Period and the Exclusive Solicitation Period are presently set to expire on October 13, 2015 and December 14, 2015, respectively. However, because the Debtors have filed this Motion prior to the expiration of the current Exclusive Filing Period, rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”) is applicable. Local Rule 9006-2 provides that “if a motion to extend the time to take any action is filed before the expiration of the period prescribed by the [Bankruptcy] Code, the [Bankruptcy Rules], these Local Rules or Court order, the time shall automatically be extended until the Court acts on the motion, without the necessity for the entry of a bridge order.” Accordingly, Local Rule 9006-2 automatically extends the Exclusive Filing Period pending the Court entering an order on the relief requested by this motion.


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and the Committee (as defined below) to discuss the Business Plan and potential

value-maximizing exit alternatives for these chapter 11 cases.

3. Notwithstanding their efforts, as the Court is aware, these meetings led the

Debtors to conclude that sufficient support for a consensual restructuring does not currently exist

among their key stakeholders. As a result, while remaining open to a plan of reorganization, but

also cognizant of their fiduciary obligation to maximize distributable value for all creditors, the

Debtors launched a process in mid-September to sell some or substantially all of their assets (the

“Sale Process”). The Sale Process, as proposed by the Debtors and approved by the Court on

October 6, 2015 will not be complete until, at the earliest, December 2015—the deadline to

submit bids on the assets is November 30, the auction for the same will be held on December 9,

and the hearing to approve any sale is scheduled for December 14. The time required to

consummate any sale approved in connection with the Sale Process will extend well into early

2016.

4. Given the timing associated with the Sale Process, the continuing potential for a

consensual restructuring, and other complexities and difficulties associated with these chapter 11

cases (as more fully described in the First Exclusivity Motion (as defined below)), the Debtors

believe that extending the Exclusive Periods as requested is reasonable, appropriate and in the

best interest of these cases and the Debtors’ stakeholders. Indeed, doing so will allow the

Debtors to pursue the Court-approved Sale Process to its logical conclusion, develop an

appropriate mechanism for distributing sale proceeds, or, if appropriate, pivot to a value-

maximizing alternative, including a consensual plan of reorganization. Accordingly, and for all

of the reasons set forth more fully herein, the Debtors submit that the Exclusive Periods should

be extended as requested.


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JURISDICTION

5. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).4

6. Venue in this Court is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

7. The statutory predicate for the relief requested herein is section 1121(d) of title 11

of the United States Code (the “Bankruptcy Code”).

BACKGROUND

A. General Background

8. On March 17, 2015 (the “Petition Date”), each of the Debtors filed a voluntary

petition for relief under chapter 11 of the Bankruptcy Code in this Court. The Debtors continue

to operate their business and manage their properties as debtors in possession pursuant to

Bankruptcy Code sections 1107(a) and 1108. These chapter 11 cases have been consolidated for

procedural purposes only and are being jointly administered pursuant to rule 1015 of the Federal

Rules of Bankruptcy Procedure and Local Rule 1015-1. No request for the appointment of a

trustee or examiner has been made in these chapter 11 cases. On March 25, 2015, the Acting

United States Trustee, Region 3 (the “U.S. Trustee”) appointed the statutory committee of

unsecured creditors (the “Committee”). See D.I. 119.

9. A description of the Debtors and their business is set forth in greater detail in the

Declaration of Vanessa Gomez LaGatta in Support of First Day Pleadings filed on the Petition

Date. See D.I. 19.

4 Under rule 9013-1(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 hereby confirm their consent to the entry of a final order by this Court in connection with this motion if it is later determined that this Court, absent consent of the parties, cannot enter final orders or judgments in connection therewith consistent with Article III of the United States Constitution.


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B. Specific Background

(i) First Exclusivity Motion and Order

10. On June 16, 2015, the Debtors filed the Motion for Entry of an Order Extending

the Exclusive Periods During which Only the Debtors May File a Chapter 11 Plan and Solicit

Acceptances Thereof (the “First Exclusivity Motion”) seeking a ninety-day extension of the

Exclusive Periods without prejudice to the Debtors’ right to seek additional such extensions (the

“First Exclusivity Extension”). See D.I. 430.

11. As indicated in the First Exclusivity Motion and at the July 7 Hearing, the

Debtors spent the first 100 days of these chapter 11 cases addressing a myriad of balance sheet

and operational issues that existed pre-petition. Among other things, the Debtors (i) rejected

multiple executory contracts and unexpired leases with a significant benefit to the estates;

(ii) worked to solidify important business relationships with key parties; (iii) began and

materially advanced negotiations with certain contract counterparties; (iv) prepared and reviewed

analyses of potential contract rejection damages with their creditor constituencies; and (v) sought

and obtained, on a contested basis, authority to modify a key contract with one of the Debtors’

joint exploration partners.

12. Each of these accomplishments was a significant step forward in moving the

Debtors toward an exit from chapter 11. As set forth at the July 7 Hearing, however, before

achieving such an exit, the Debtors first needed to accomplish several critical tasks, including (i)

refining their Business Plan so it could serve as the foundation for negotiations with the Debtors’

stakeholders and (ii) further advancing certain renegotiations with key contract counterparties.

13. On July 7, the Court granted the First Exclusivity Extension, entering its Order

Extending the Exclusive Periods During which Only the Debtors May File a Chapter 11 Plan

and Solicit Acceptances Thereof (the “First Exclusivity Order”). See D.I. 473.


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(ii) Progress Since the July 7 Hearing

14. Since the First Exclusivity Order was entered, the Debtors have devoted

substantial time and resources to completing the critical tasks outlined at the July 7 Hearing.

Most importantly, the Debtors refined their Business Plan to use as the basis for negotiations

with their stakeholders. The Business Plan, as refined by the Debtors, reflects the Debtors’ go-

forward operational plan in the United States and Canada, includes realized and projected

savings as a result of right-sizing the Debtors’ cost structure, features multiple alternative

forecasts, and has formed the basis for numerous in-person meetings regarding restructuring

alternatives with the principals and professionals of the Debtors’ secured creditors and the

Committee.

15. The Debtors have also spent significant time since the July 7 Hearing

renegotiating certain key executory contracts. These parties and the Debtors have exchanged

multiple revised contract proposals and held numerous in-person meetings related thereto. To

the extent that these negotiations are successful the Debtors may further reduce their cost

structure, which will benefit all parties in interest.5

(iii) The Sale Process

16. As the Court is aware, despite the Debtors’ best efforts, their numerous calls and

meetings with their creditor constituencies to discuss the Business Plan and restructuring

alternatives in July, August, and September led them to conclude that sufficient support for a

5 In addition to the Debtors’ substantial efforts to complete the tasks necessary to move toward a swift exit from chapter 11, they have also continued to (i) meet all of their obligations as debtors in possession, by, among other things, filing regular monthly operating reports, see D.I. 440, 506, 584, and 645; (ii) pay all bills and taxes as they come due; (iii) remain current on all required filings by the Securities Exchange Commission (the “SEC”); (iv) share frequent business and restructuring information and updates with the Committee, the Debtors’ secured lenders, and their respective professionals, including by holding weekly calls with their advisors; (v) reconcile claims filed against the estates, including by docketing their first omnibus objection to claims on October 2, see D.I. 672 and (vi) successfully negotiated a further extension of the forbearance agreement with their first lien lenders with respect to the Canadian Credit Agreement.


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confirmable plan of reorganization does not exist at this time. As a result, and cognizant of their

(i) current monthly cash outlay that is estimated to average approximately $8 million per month

from the Petition Date through November 30, (ii) continued use of cash collateral, (iii) assets

depleting through normal operations, and (iv) fiduciary obligation to maximize distributable

value for all creditors, the Debtors launched the Sale Process in mid-September by distributing

non-disclosure agreements, teasers (a copy of which was also posted to the Debtors’ website on

the same day they filed the Sale Motion (defined below)), and other information to potentially

interested parties, signing non-disclosure agreements, and providing these parties with access to

diligence materials.

17. Importantly, the Sale Process (i) is open to all potential bidders, including third

parties and current holders in the Debtors’ capital structure; (ii) protects the best interests of the

Debtors’ estates and creditors; and (iii) preserves the Debtors’ right to exercise their fiduciary

duties should a value-maximizing alternative materialize, including a plan of reorganization.

This approach is grounded in the Debtors’ belief that conducting a fair and robust auction at this

time is the most viable alternative to maximize the distributable value of their assets and elicit

valuable market feedback for their stakeholders.

18. In connection with launching the Sale Process in mid-September, the Debtors

filed the Debtors’ Motion For (I) An Order Establishing Bidding Procedures and Granting

Related Relief and (II) An Order or Orders Approving the Sale of the Assets (the “Sale Motion”).

See D.I. 636.6 Among other things, the Sale Motion sought approval of procedures and deadlines

for interested parties to submit bids to purchase some or substantially all of the Debtors’ assets

6 Contemporaneously with the domestic Sale Process, and as previewed in the Sale Motion, the Debtors have

launched a parallel process for the sale of the assets of Quicksilver’s non-Debtor Canadian subsidiaries.


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and for the Debtors to conduct an auction with respect to any bids received by the applicable

deadline (collectively, the “Bidding Procedures”).

19. The Court approved the Bidding Procedures on October 6, 2015 and entered its

Order Establishing Bidding Procedures Relating to the Sales of All or a Portion of the Debtors

Assets (the “Bidding Procedures Order”). See D.I. 681. The Bidding Procedures contemplate

dates and deadlines as late as December 14, 2015, including the following:

• November 30, 2015 at 5:00 p.m. (prevailing Eastern Time): Bid Deadline7

• December 2, 2015 at 4:00 p.m. (prevailing Eastern Time): Sale Objection Deadline

• December 9, 2015 at 10:00 a.m. (prevailing Central Time): Auction

• December 11, 2015 at 12:00 p.m. (prevailing Eastern Time): Reply Deadline

• December 14, 2015 at 10:00 a.m. (prevailing Eastern Time): Sale Hearing

(iv) Longstanding Challenges Facing the Debtors

20. Despite the progress made by the Debtors to date in these chapter 11 cases and

since the First Exclusivity Motion, the Debtors still face many of the challenges discussed at

length therein. As this Court is aware, these chapter 11 cases are large and complex. There are

thousands of potential creditors, numerous general unsecured claims, fourteen Debtors with non-

Debtor affiliates in Canada and the Cayman Islands, and approximately $2 billion in pre-petition

debt that is in three tranches (spread among six different issuances) and includes publicly traded

debt. Additionally, the industry in which the Debtors operate presents a number of challenging

issues as well. Like other small to mid-sized oil and gas producers, the Debtors are subject to

published prices and therefore have no meaningful influence over the extent and timing of

commodity price fluctuations, including the ultimate price paid at a given delivery point for their

7 Capitalized terms used but not otherwise defined in this list shall have the meanings ascribed to them in the Sale

Motion.


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hydrocarbons. For a number of oil and gas exploration companies, including the Debtors, these

unpredictable commodity prices have exacerbated balance sheet issues and fiscal pressures and

led to chapter 11 filings and other restructuring activities.

21. Further extending the Exclusive Periods at this time will allow the Debtors to

maximize distributable value for all stakeholders by pursuing the Sale Process already approved

by the Court, fashion appropriate mechanisms for distributing sale proceeds to creditors, or pivot

to a value-maximizing alternative, including, if applicable, a plan of reorganization.

Accordingly, for all the foregoing reasons, the Debtors believe that the requested extension of the

Exclusive Periods is reasonable under the circumstances, in the best interest of their creditors and

other stakeholders, and should be approved.

RELIEF REQUESTED

22. By this motion, pursuant to Bankruptcy Code section 1121(d), the Debtors request

entry of the Proposed Order extending the Exclusive Filing Period through and including

February 1, 2016 and the Exclusive Solicitation Period through and including April 13, 2016 in

each case, subject, and without prejudice, to the Debtors’ right to request further extension(s) of

the Exclusive Periods pursuant to Bankruptcy Code section 1121(d).

SUPPORTING AUTHORITY

A. Legal Standard for Extending the Exclusive Periods

23. Bankruptcy Code section 1121(b) provides debtors with the exclusive right to

propose a chapter 11 plan for the first 120 days of a chapter 11 case. See 11 U.S.C. § 1121(b).

Likewise, Bankruptcy Code section 1121(c)(3) provides that if the debtor files a plan within the

Exclusive Filing Period, it has an initial period of 180 days as of the commencement of the

chapter 11 case to obtain acceptance of such plan. See 11 U.S.C. § 1121(c)(3). Bankruptcy

Code section 1121(d) permits a bankruptcy court to extend a debtor’s exclusive period to file a


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plan and solicit acceptances thereof upon a demonstration of “cause.” See 11 U.S.C. § 1121(d).

For the reasons set forth herein, the Debtors believe that “cause” exists to extend the Exclusive

Periods.

24. The Exclusive Periods under Bankruptcy Code section 1121 are intended “‘to

promote an environment in which the debtor’s business may be rehabilitated and a consensual

plan may be negotiated.’” In re Burns & Roe Enters., Inc., No. 00-41610 RG, 2005 WL

6289213, at *4 (D.N.J. Nov. 2, 2005) (quoting H.R. Rep. No. 103–835, at 36 (1994), as

reprinted in 1994 U.S.C.C.A.N. 3340, 3344). Importantly, the Exclusive Periods afford the

Debtors the opportunity to propose a chapter 11 plan and to solicit acceptances of such plan

without the potential value deterioration and certain disruption to the Debtors’ business

operations that would be caused by the filing of competing plans by non-Debtor parties.

Particularly in cases such as these that are large and complex, there are numerous critical

components that must be achieved before a chapter 11 plan can be proposed, negotiated, and

confirmed. In circumstances where, as here, there is a near certainty that the statutorily

established Exclusive Periods prove an insufficient time frame during which the Debtors may

file and solicit acceptance of a chapter 11 plan, Bankruptcy Code section 1121(d) permits a

bankruptcy court to extend a debtor’s exclusive period to file a chapter 11 plan and solicit

acceptances thereof “for cause.” 11 U.S.C. § 1121(d) (indicating that “on request of a party in

interest made within the respective periods specified in subsections (b) and (c) of this section and

after notice and a hearing, the court may for cause reduce or increase the 120-day period or the

180-day period referred to in this section”).8

8 Additionally, even if cause is shown, the 120-day period “may not be extended beyond a date that is 18 months after the [petition] date” and the 180-day period “may not be extended beyond a date that is 20 months after the [petition] date.” 11 U.S.C. § 1121(d)(2). The extensions to the Exclusive Periods requested herein do not exceed these limits.


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25. Courts within the Third Circuit and in other jurisdictions have held that the

decision to extend a debtor’s exclusivity periods is left to the sound discretion of a bankruptcy

court and should be based on the totality of circumstances in each case. See, e.g., First Am. Bank

of N.Y. v. Sw. Gloves & Safety Equip., Inc., 64 B.R. 963, 965 (D. Del. 1986); In re Dow Corning

Corp., 208 B.R. 661, 664 (Bankr. E.D. Mich. 1997); In re Express One Int’l, Inc., 194 B.R. 98,

100 (Bankr. E.D. Tex. 1996); In re McLean Indus., Inc., 87 B.R. 830, 834 (Bankr. S.D.N.Y.

1987). Although the Bankruptcy Code does not define “cause,” legislative history indicates that

“cause” should be viewed flexibly “to allow the debtor to reach an agreement.” H.R. Rep. No.

95-595 at 231, 232 (1978), as reprinted in 1978 U.S.C.C.A.N. 5963, 6191. At its base, a debtor

should be given a reasonable opportunity to negotiate with creditors and to prepare adequate

information concerning the ramifications of any proposed plan for disclosure to creditors. See In

re Texaco Inc., 76 B.R. 322, 327 (Bankr. S.D.N.Y. 1987).

26. Indeed, courts have found that Congress did not intend that the 120- and 180-day

periods be treated as a hard and fast rule. See In re Amko Plastics, Inc., 197 B.R. 74, 77 (Bankr.

S.D. Ohio 1996) (noting that Congress intended courts to have flexibility in dealing with

extensions of exclusivity); Gaines v. Perkins (In re Perkins), 71 B.R. 294, 297 (W.D. Tenn.

1987) (“The hallmark of . . . [section 1121(d)] is flexibility”). Rather, Congress intended that the

Exclusive Periods be of an adequate length, given the circumstances, for a debtor to formulate,

negotiate, and draft a viable plan of reorganization, which, by definition, is one that is supported

by some or all of a debtor’s key constituents, without the disruption to its business that would

occur with the filing of competing plans. See Geriatrics Nursing Home v. First Fidelity Bank,

N.A., 187 B.R. 128, 133 (D. N.J. 1995) (“The opportunity to negotiate [a] plan unimpaired by


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competition, the court held, is meant to allow the debtor time to satisfy all creditors and win

support for its restructuring scheme and thus ensure its survival as a business.”).

27. Courts consider the following in deciding whether “cause” exists to extend a

debtor’s exclusive periods:

(a) the size and complexity of the case;

(b) the sufficiency of the time remaining prior to the end of the Exclusive Periods for the debtor to negotiate a chapter 11 plan and prepare adequate information;

(c) whether there has been good faith progress toward reorganization;

(d) whether the debtor is paying its bills as they come due, has demonstrated reasonable prospects for filing a viable plan, has made progress in its negotiations with creditors, and is seeking to extend exclusivity to pressure creditors to accede to the debtor’s reorganization demands;

(e) the amount of time that has elapsed in the case;

(f) whether creditors are prejudiced by the extension; and

(g) the existence of an unresolved contingency.

See In re Cent. Jersey Airport Servs., LLC, 282 B.R. 176, 183 (Bankr. D.N.J. 2002); McLean

Indus., 87 B.R. at 834; see also Dow Corning, 208 B.R. at 664 (identifying the above factors and

noting that courts generally rely on the same factors to determine whether exclusivity should be

extended); In re Friedman’s Inc., 336 B.R. 884, 888 (Bankr. D. Ga. 2005) (same).

28. Not all of these factors are relevant in every case, and a finding that any one of

these factors exists may justify extending a debtor’s exclusive periods. See Express One Int’l,

194 B.R. at 100 (four factors relevant in determining whether cause exists to extend exclusivity);

In re Interco, Inc., 137 B.R. 999, 1001 (Bankr. E.D. Mo. 1992) (four factors analyzed in ruling

that bondholders’ committee failed to show cause to terminate debtors’ exclusivity).


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B. Cause Exists to Extend the Exclusive Periods

29. The facts and circumstances of these chapter 11 cases satisfy the foregoing factors

and demonstrate that more than sufficient cause exists to grant the Debtors’ requested extensions

of the Exclusive Periods.

(i) Notwithstanding that the Debtors’ Chapter 11 Cases are Large and Complex, there has Been Substantial Good Faith Progress Toward a Value-Maximizing Conclusion to these Cases

30. It is well settled that the size and complexity of a debtor’s chapter 11 case alone

may warrant an extension of exclusive periods in order to permit a debtor a meaningful

opportunity to formulate a chapter 11 plan. See, e.g., Texaco Inc., 76 B.R. at 325-27 (holding

that “cause” existed to grant the debtor’s first request to extend exclusivity based on the size and

complexity of the case alone); In re Manville Forest Prods. Corp., 31 B.R. 991, 995 (S.D.N.Y.

1983) (“[S]heer mass, weight, volume and complication of the [debtors’] filings undoubtedly

justify a shakedown period.”).

31. As discussed in detail in the First Exclusivity Motion, these chapter 11 cases are

sufficiently large and complex to support this Court’s granting the Extension. The size and

complexity of the Debtors’ businesses, assets, corporate structure, employee relationships,

vendor relationships, and financing arrangements, when coupled with the adverse conditions

facing the oil and gas industry as a whole, have placed a heavy burden on the Debtors’

management, employees, and advisors since the Petition Date. These facts have not changed

since the First Exclusivity Order was entered.

32. Notwithstanding these challenges, the Debtors have continued to make

substantial, good-faith progress toward a value-maximizing exit from chapter 11. As set forth in

detail above, the Debtors’ various accomplishments in streamlining their operations and

addressing their multiple balance sheet and operational issues in the first 100 day of these cases


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allowed the Debtors to spend the last 90 days focusing on the key prerequisites to formulating an

exit from chapter 11. Since the July 7 Hearing, the Debtors have, among other things,

(i) produced a detailed Business Plan that was designed to form the basis for negotiations on

restructuring alternatives with their secured lenders and the Committee, (ii) held numerous

in-person meetings with both the professionals and principals of their secured lenders and the

Committee to discuss the Business Plan and value-maximizing alternatives, and (iii) materially

advanced their negotiations with key contract counter parties.

33. The Debtors’ efforts with respect to their Business Plan and their discussions with

their key creditor constituencies resulted in the mid-September launch of a Sale Process that (i) is

open to all potential bidders, including third parties and current holders in the Debtors’ capital

structure; (ii) protects the best interests of the Debtors’ estates and creditors; and (iii) preserves

the Debtors’ right to exercise their fiduciary duties should a value-maximizing alternative

emerge, including a plan of reorganization. That sale process has been approved by the Court

and is now underway in earnest. Indeed, since the Sale Process was commenced, the Debtors’

investment banker, Houlihan Lokey Capital, Inc., has actively engaged potentially interested

parties, executed numerous confidentiality agreements, and begun providing interested parties

access to diligence materials. The Sale Process will not be completed until, at the earliest,

December 2015, as the bid deadline is not until November 30, the auction will be held on

December 9, the sale hearing is scheduled for December 14, and any transaction will likely close

in 2016.

(ii) The Debtors Have Demonstrated Reasonable Prospects for Filing a Viable Plan

34. Notwithstanding the complexity of their chapter 11 cases, the Debtors have

demonstrated reasonable prospects for filing a plan by advancing the Sale Process with the


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support of certain key creditor constituencies. Should it succeed, the Sale Process could result in

most, if not all, of the Debtors’ assets being sold out of chapter 11 and operated by a new owner

on a go-forward basis. A successful sale would set the stage for the Debtors and their key

creditor constituencies to negotiate a mechanism for distributing sale proceeds to creditors, likely

through a plan of liquidation. Importantly, however, the Sale Process will also provide key

market feedback regarding the value of the Debtors’ assets that could foster plan-related

discussions for any chapter 11 plan that may be proposed.

(iii) There Is Not Sufficient Time Remaining Prior to the End of the Exclusive Periods for the Debtors to Complete the Sale Process and/or Negotiate a Plan

35. As indicated above, under the First Exclusivity Extension Order, the Exclusive

Filing Period and the Exclusive Solicitation Period are presently set to expire on October 13,

2015 and December 14, 2015, respectively. It is simply not feasible for the Debtors, before

expiration of the Exclusive Periods, to complete the Sale Process, formulate and execute

mechanisms to distribute sale proceeds, or, if applicable, negotiate and prepare a plan of

reorganization, all while managing an international going-concern saddled with billions of

dollars of debt and operating in a volatile industry. The requested extension of the Exclusive

Periods will allow the Debtors to pursue each of these objectives and arrive at a

value-maximizing exit from chapter 11 without the value-destructive distraction that would

result from any party in interest proposing its own chapter 11 plan at this juncture.

(iv) The Debtors Are Paying Their Bills as They Become Due

36. In the ordinary course of their business, the Debtors have been paying their

undisputed post-petition bills as they become due. Moreover, as evidenced by the approximately

$146.5 million of cash presently on hand, the Debtors have sufficient liquidity to continue to

meet their post-petition obligations as they come due. Thus, the requested extension of the


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Exclusive Periods will not jeopardize the rights of creditors and other parties who do business

with the Debtors during these chapter 11 cases.

(v) Little Time Has Elapsed in these Chapter 11 Cases

37. The Debtors’ request for an extension of the Exclusive Periods is the Debtors’

second and comes approximately seven months after the Petition Date. As discussed above, the

Debtors have accomplished a great deal since commencing these chapter 11 cases. As is often

the case in large and complex cases, and given the scope of what must be accomplished in these

chapter 11 cases, however, there is still much more to do, especially with respect to running a

robust, Court-approved Sale Process. Accordingly, the Debtors submit that the requested

extension of the Exclusive Periods is warranted.

(vi) An Extension of the Exclusive Periods Will Not Prejudice Creditors

38. The Debtors are requesting an extension of the Exclusive Periods to maintain

focus on completing the Sale Process and negotiating a consensual mechanism for distributing

proceeds, or obtaining support for a value-maximizing alternative, including a consensual plan of

reorganization, if applicable. This extension will not prejudice the Debtors’ creditors. To the

contrary, the requested extension is intended to allow the Debtors to work cooperatively with

their key constituents toward these goals in the most cost-efficient manner possible and to permit

the Debtors to complete the Sale Process, which is supported by their secured creditors.

(vii) The Debtors Are Not Seeking an Extension of the Exclusive Periods to Pressure Creditors to Submit to the Debtors’ Reorganization Demands

39. The Debtors’ request to extend the Exclusive Periods is not intended to maintain

leverage over a group of creditors whose interests are being harmed by the chapter 11 cases.

Rather, and as described herein, the Debtors have worked to resolve critical issues in these cases


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for the ultimate benefit of their creditors as a whole and are pursuing the Sale Process with

significant creditor support.

(viii) Extending the Exclusive Periods is Necessary to Resolve Certain Contingencies

40. The requested extension of the Exclusive Periods is also appropriate because of

critical unresolved contingencies in the Debtors’ chapter 11 cases, the most significant of which

is the Sale Process. At this stage, it is unknown which, if any, of the Debtors’ assets will be sold

through the Sale Process or how much additional proceeds for creditor distributions this process

will generate. This is unsurprising given that the Sale Process was launched in mid-September

and is scheduled to run through December 14. Permitting the Exclusive Periods to expire well

before then may prevent the Debtors from addressing a crucial, unresolved contingency that

could significantly influence the outcome and direction of these chapter 11 cases.

41. A second significant unresolved contingency relates to the Committee’s lien

review and potential litigation against the Debtors’ second lienholders with respect to the same.

It is unlikelyif not impossiblethat any party can propose a viable plan until those matters are

resolved. Indeed, the Committee only recently sought standing to pursue claims against the

Second Lien Lenders, and any resultant litigation will likely extend well beyond the expiration of

the current Exclusive Periods. See D.I. 676. Resolution, whether consensual or litigated, of the

matters at the heart of this litigation is necessary to determine the appropriate distribution of

value among the second lienholders and the Debtors’ unsecured creditors. As such, the final

determination of these issues will have a potentially material impact on the development of any

chapter 11 plan.


18 RLF1 13147005v.1

C. Similar Relief

42. Finally, courts in this and other jurisdictions have often granted similar relief

where, as here, the facts and circumstances justify extensions of a debtor’s exclusivity. See, e.g.,

In re Endeavour Operating Corp., No. 14-12308 (KJC) (Bankr. D. Del. Mar. 9, 2015) (granting

second extension of approximately 120 days); In re Trump Entm’t Resorts, No 14-12103 (KG)

(Bankr. D. Del. Jan. 28, 2015) (granting second extension of approximately 120 days); In re

Optim Energy, LLC, No. 14-10262 (BLS) (Bankr. D. Del. June 10, 2014) (granting second

extension of approximately 120 days); In re Nortel Networks Inc., Ch. 11 Case No. 09-10138

(KG) (Bankr. D. Del. May 20, 2009) (granting second extension of approximately 162 days); In

re Smurfit-Stone Container Corp., Case No. 09-10235 (BLS) (Bankr. D. Del. May 19, 2009)

(granting second extension of approximately 120 days); In re New Century TRS Holdings, Inc.,

Ch. 11 Case No. 07-10416 (KJC) (Bankr. D. Del. Aug. 1, 2007) (granting second extension of

approximately 60 days).

DEBTORS’ RESERVATION OF RIGHTS

43. The Debtors reserve the right to supplement this motion and request that any

relief granted be without prejudice to the Debtors’ ability to seek further extension or

modification of the Exclusive Periods.

NOTICE

44. No trustee or examiner has been appointed in the Debtors’ chapter 11 cases. The

Debtors have provided notice of this motion to (a) the U.S. Trustee, Attn: Jane Leamy, Esq.; (b)

counsel to the Committee; (c) counsel to the agents under the Debtors’ pre-petition credit

facilities; (d) counsel to the Ad Hoc Group of Second Lienholders; (e) counsel to the indenture

trustees under the Debtors’ pre-petition indentures; (f) the SEC; (g) the Internal Revenue

Service; and (h) any parties entitled to notice pursuant to Local Rule 2002-1(b). In light of the


19 RLF1 13147005v.1

nature of the relief requested in this motion, the Debtors respectfully submit that no further

notice is necessary.

WHEREFORE, for the reasons set forth herein, the Debtors respectfully request that the

Court (a) enter the Proposed Order substantially in the form annexed hereto as Exhibit A

granting the relief requested in the motion and (b) grant such other and further relief as may be

just and proper.

Wilmington, Delaware Date: October 13, 2015 /s/ Amanda R. Steele RICHARDS, LAYTON & FINGER, P.A.

Paul N. Heath (DE 3704) Amanda R. Steele (DE 5530) Rachel L. Biblo (DE 6012) One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 – and –

AKIN GUMP STRAUSS HAUER & FELD LLP Charles R. Gibbs (admitted pro hac vice) Sarah Link Schultz (admitted pro hac vice) Travis A. McRoberts (DE 5274) 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Telephone: (214) 969-2800 Facsimile: (214) 969-4343 Ashleigh L. Blaylock (admitted pro hac vice) Robert S. Strauss Building 1333 New Hampshire Avenue, N.W. Washington, DC 20036-1564 Telephone: (202) 887-4000 Facsimile: (202) 887-4288 COUNSEL FOR DEBTORS AND DEBTORS IN

POSSESSION


RLF1 13147056v.1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE


) Hearing Date: November 3, 2015 at 10:00 a.m. (EST) Obj. Deadline: October 27, 2015 at 4:00 p.m. (EDT)

NOTICE OF MOTION AND HEARING

PLEASE TAKE NOTICE that on October 13, 2015, the above-captioned debtors

and debtors in possession (collectively, the “Debtors”) filed the Debtors’ Motion for Entry of an

Order Further Extending the Exclusive Periods During Which Only the Debtors May File a

Chapter 11 Plan and Solicit Acceptances Thereof (the “Motion”) with the United States

Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).

PLEASE TAKE FURTHER NOTICE that, any responses or objections to the

Motion must be filed in writing with the Bankruptcy Court, 824 N. Market Street, 3rd Floor,

Wilmington, Delaware 19801, and served upon and received by the undersigned counsel for the

Debtors on or before October 27, 2015 at 4:00 p.m. (prevailing Eastern Time).

PLEASE TAKE FURTHER NOTICE that, if an objection is timely filed, served and

received and such objection is not otherwise timely resolved, a hearing to consider such

objection and the Application will be held before The Honorable Laurie Selber Silverstein at the

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: Quicksilver Resources Inc. (“QRI”) [6163]; Barnett Shale Operating LLC [0257]; Cowtown Drilling, Inc. [8899]; Cowtown Gas Processing L.P. [1404]; Cowtown Pipeline Funding, Inc. [9774]; Cowtown Pipeline L.P. [9769]; Cowtown Pipeline Management, Inc. [9771]; Makarios Resources International Holdings LLC [1765]; Makarios Resources International Inc. [7612]; QPP Holdings LLC [0057]; QPP Parent LLC [8748]; Quicksilver Production Partners GP LLC [2701]; Quicksilver Production Partners LP [9129]; and Silver Stream Pipeline Company LLC [9384]. The Debtors’ address is 801 Cherry Street, Suite 3700, Unit 19, Fort Worth, Texas 76102.

Case 15-10585-LSS Doc 693-1 Filed 10/13/15 Page 1 of 2

2 RLF1 13147056v.1

Bankruptcy Court, 824 N. Market Street, 6th Floor, Courtroom 2, Wilmington, Delaware 19801

on November 3, 2015 at 10:00 a.m. (prevailing Eastern Standard Time).

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.

Wilmington, Delaware Date: October 13, 2015 /s/ Amanda R. Steele RICHARDS, LAYTON & FINGER, P.A.

Paul N. Heath (DE 3704) Amanda R. Steele (DE 5530) Rachel L. Biblo (DE 6012) One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 – and –

AKIN GUMP STRAUSS HAUER & FELD LLP Charles R. Gibbs (admitted pro hac vice) Sarah Link Schultz (admitted pro hac vice) 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75201 Telephone: (214) 969-2800 Facsimile: (214) 969-4343 Ashleigh L. Blaylock (admitted pro hac vice) Robert S. Strauss Building 1333 New Hampshire Avenue, N.W. Washington, DC 20036-1564 Telephone: (202) 887-4000 Facsimile: (202) 887-4288 COUNSEL FOR DEBTORS AND DEBTORS IN POSSESSION


#207450864RLF1 13147005v.1

Exhibit A

Proposed Order


RLF1 13147005v.1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE


ORDER FURTHER EXTENDING THE EXCLUSIVE

PERIODS DURING WHICH ONLY THE DEBTORS

MAY FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF

Upon the motion2 of the above-captioned debtors and debtors in possession (collectively,

the “Debtors”), for entry of this Order, pursuant to Bankruptcy Code section 1121(d), extending

(i) the Exclusive Filing Period through and including February 1, 2016 and (ii) the Exclusive

Solicitation Period through and including April 13, 2016, all as more fully described in the

motion; and the Court having jurisdiction to consider this motion and the relief requested therein

in accordance with 28 U.S.C. §§ 157 and 1334; and consideration of the motion and the relief

requested therein being a core proceeding in accordance with 28 U.S.C. § 157(b)(2); and venue

being proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice

of the motion being adequate and appropriate under the particular circumstances; and a hearing

having been held to consider the relief requested in the motion; and upon the record of the

hearing and all proceedings had before the Court; and the Court having found and determined

that the relief sought in the motion is in the best interests of the Debtors’ estates, their creditors,

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: Quicksilver Resources Inc. [6163]; Barnett Shale Operating LLC [0257]; Cowtown Drilling, Inc. [8899]; Cowtown Gas Processing L.P. [1404]; Cowtown Pipeline Funding, Inc. [9774]; Cowtown Pipeline L.P. [9769]; Cowtown Pipeline Management, Inc. [9771]; Makarios Resources International Holdings LLC [1765]; Makarios Resources International Inc. [7612]; QPP Holdings LLC [0057]; QPP Parent LLC [8748]; Quicksilver Production Partners GP LLC [2701]; Quicksilver Production Partners LP [9129]; and Silver Stream Pipeline Company LLC [9384]. The Debtors’ address is 801 Cherry Street, Suite 3700, Unit 19, Fort Worth, Texas 76102.

2 All capitalized terms not otherwise defined herein are to be given the meanings ascribed to them in the motion.


2 RLF1 13147005v.1

and other parties in interest and that the legal and factual bases set forth in the motion establish

just cause for the relief granted herein; and any objections to the requested relief having been

withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing

therefor, it is hereby ORDERED:

1. The motion is granted to the extent provided herein.

2. The Exclusive Filing Period is extended through and including February 1, 2016,

and the Exclusive Solicitation Period is extended through and including April 13, 2016.

3. This Order and the relief requested herein is without prejudice to the Debtors’

ability to seek further extensions of the Exclusive Periods pursuant to Bankruptcy Code section

1121(d).

4. The Debtors are authorized to take all actions necessary to effectuate the relief

granted pursuant to this Order in accordance with the motion.

5. The Court retains jurisdiction with respect to all matters arising from or related to

the interpretation or implementation of this Order.

Wilmington, Delaware

Date: [_________], 2015

THE HONORABLE LAURIE SELBER SILVERSTEIN UNITED STATES BANKRUPTCY JUDGE


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