Newspaper article THE JOURNAL RECORD

Magic Circle Reorganization Proposal Approved by Judge

Newspaper article THE JOURNAL RECORD

Magic Circle Reorganization Proposal Approved by Judge

Article excerpt

The reorganization plan for Magic Circle Energy Corp. was approved Tuesday by U.S. Bankruptcy Judge Robert Berry, paving the way for the formation of a new corporation and partnership.

Magic Circle attorney Jack Kinzie said it was safe to say the plan was overwhelmingly accepted by creditors of the estate, which entered Chapter 11 bankruptcy in April 1985.

The reorganization "workout" in Magic Circle began in 1983, Kinzie said. At the time the oil firm entered bankruptcy, it had entered agreements with most of its creditors. The largest battle was with the banks, now represented by Wells Fargo Bank N.A., which had a $55 million claim. Wells Fargo is a proponent of the plan in addition to Magic Circle and the Official Unsecured Creditors Committee.

Kinzie said if oil prices remain constant, the payout under the plan would be over a period of 15 years. If prices increase, the debts could be paid out earlier.

Approval of the plan was delayed several hours while attorneys discussed and settled problems in the proposal.

Objections of one of five creditors has been worked out for an amendment to the plan, and three other creditors settled objections through agreements as to treatment of their claims under the plan.

Appeals of previous orders entered in the case were appealed and three objectors requested that the confirmation hearing be postponed. When their request was denied Monday morning, Magic Circle began working on new proposals for the creditors.

Teachers Insurance & Annuity Association, with an original claim of $5 million, agreed to payment of $400,000 free and clear of liens held by Wells Fargo plus a $4.6 million participating claim in the class of creditors sharing in a creditors trust fund. …

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