Chapter 11 reorganization

Bankruptcy petition and emergence. On May 9, 2016 (the “Petition Date”), Chaparral Energy, Inc. and its subsidiaries including Chaparral Energy, L.L.C., Chaparral Resources, L.L.C., Chaparral Real Estate, L.L.C., Chaparral CO₂ , L.L.C., CEI Pipeline, L.L.C., CEI Acquisition, L.L.C., Green Country Supply, Inc., Chaparral Biofuels, L.L.C., Chaparral Exploration, L.L.C., and Roadrunner Drilling, L.L.C. (collectively, the “Chapter 11 Subsidiaries” and, together with Chaparral Energy, Inc., the “Debtors”) filed voluntary petitions seeking relief under Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) commencing cases for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”).

On March 10, 2017 (the “Confirmation Date”), the Bankruptcy Court confirmed our Reorganization Plan and on March 21, 2017 (the “Effective Date”), the Reorganization Plan became effective and we emerged from bankruptcy.

Plan of Reorganization. Pursuant to the terms of the Reorganization Plan, which was supported by us, certain lenders under our Prior Credit Facility (collectively, the “Lenders”) and certain holders of our Prior Senior Notes (collectively, the “Noteholders”), the following transactions occurred on or around the Effective Date:

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We issued 44,982,142 shares of common stock of the reorganized company (“New Common Stock”), which were the result of the transactions described below. We also entered into a stockholders agreement and a Registration Rights Agreement and amended our certificate of incorporation and bylaws for the authorization of the New Common Stock and to provide registration rights thereunder, among other corporate governance actions;


•	Our Predecessor common stock was cancelled, extinguished and discharged and the Predecessor equity holders did not receive any consideration in respect of their equity interests;

•

The $1,267,410 of indebtedness, including accrued interest, attributable to our Prior Senior Notes was exchanged for New Common Stock. In addition, we issued or reserved shares of New Common Stock to be exchanged in settlement of $2,439 of certain general unsecured claims. In aggregate, the shares of New Common Stock issued or to be issued in settlement of the Senior Note and these general unsecured claims represented approximately 90% of outstanding Successor common shares;


•	We completed a rights offering backstopped by certain holders of our Prior Senior Notes (the “Backstop Parties”), which generated $50,031 of gross proceeds. The rights offering resulted in the issuance of New Common Stock, representing approximately nine percent of outstanding Successor common shares, to holders of claims arising under the Prior Senior Notes and to the Backstop Parties;


•	In connection with the rights offering described above, the Backstop Parties received approximately one percent of outstanding Successor common shares as a backstop fee;


•	Additional shares, representing seven percent of outstanding Successor common shares on a fully diluted basis, were authorized for issuance under a new management incentive plan;


•	Warrants to purchase 140,023 shares of New Common Stock were issued to Mr. Mark Fischer, our founder and former Chief Executive Officer (“Mr. Fischer”), with an exercise price of $36.78 per share and expiring on June 30, 2018. The warrants were issued in exchange for consulting services provided by Mr. Fischer;

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Pursuant to our Reorganization Plan, on January 5, 2017, we entered into the Retirement Agreement and General Release (the “Retirement Agreement”) with Mr. Fischer, whereupon Mr. Fischer terminated his employment with the Company on that date. The Retirement Agreement included severance consisting of cash and certain tangible assets in the amount of $4,038. Mr. Fisher provided consulting services to the Company during the period subsequent to his termination until the Effective Date for which he received the warrants disclosed above. The expense for Mr. Fischer’s severance and consulting services are reflected in “Reorganization items, net” and “General and administrative” expense, respectively, in our consolidated statement of operations during the 2017 Predecessor period. All amounts due to Mr. Fischer pursuant to the Retirement Agreement were paid as of December 31, 2017.

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Our Prior Credit Facility, previously consisting of a senior secured revolving credit facility was restructured into an Exit Credit Facility consisting of a first-out revolving facility (“Exit Revolver”) and a second-out term loan (“Exit Term Loan”). On the Effective Date, the entire balance on the Prior Credit Facility in the amount of $444,440 was repaid while we received gross proceeds representing the opening balances on our Exit Revolver of $120,000 and an Exit Term Loan of $150,000. For more information refer to “Note 8: Debt;”


•	We paid $6,954 for creditor-related professional fees and also funded a $11,000 segregated account for debtor-related professional fees in connection with the reorganization related transactions above;


•	Certain other priority or convenience class claims were paid in full in cash, reinstated or otherwise treated in a manner acceptable to the creditor claimholders;

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Plaintiffs to one of our royalty owner litigation cases, which were identified as a separate class of creditors (Class 8) in our bankruptcy case, rejected the Reorganization Plan. If the claimants under Class 8 are permitted to file a class of proof claim on behalf of the putative class, certified on a class basis, and the plaintiffs ultimately prevail on the merits of their claims, any liability arising under judgement or settlement of the claims that relate to the pre-petition period would be satisfied through issuance of Successor common shares.

Liabilities subject to compromise. In accordance with ASC Topic 852, Reorganizations (“ASC 852”), our financial statements include amounts classified as liabilities subject to compromise which represent estimates of pre-petition obligations that were allowed as claims in our bankruptcy case. These liabilities are reported at the amounts allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. The amounts disclosed below as of March 21, 2017, reflect the liabilities immediately prior to our Reorganization Plan becoming effective. As part of the Reorganization Plan, the Bankruptcy Court approved the settlement of these claims and they were subsequently settled in cash or equity, reinstated or otherwise reserved for at emergence.



	Predecessor
	March 21, 2017
Accounts payable and accrued liabilities	$	6,687
Accrued payroll and benefits payable	3,949
Revenue distribution payable	3,050
Prior Senior Notes and associated accrued interest	1,267,410
Liabilities subject to compromise	$	1,281,096