LLEX Lilis Energy Inc

Second Amendment to DIP Credit Agreement

As previously disclosed, on June 28, 2020, Lilis Energy, Inc., a Nevada corporation (the “Company”), and its consolidated subsidiaries Brushy Resources, Inc., ImPetro Operating LLC, ImPetro Resources, LLC, Lilis Operating Company, LLC and Hurricane Resources LLC (collectively, the “Filing Subsidiaries”) filed voluntary petitions seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) commencing cases for relief under Chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”).  In connection with the Chapter 11 Cases, on June 30, 2020, the Company entered into that certain Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (as amended, the “DIP Credit Agreement”) with the Filing Subsidiaries, as guarantors, BMO Harris Bank N.A., as administrative agent (the “Administrative Agent”), and the lenders party thereto (the “Lenders”).  

On August 21, 2020, the Company, the Filing Subsidiaries, the Administrative Agent and the Lenders entered into a Second Amendment (the “Second Amendment”) to the DIP Credit Agreement. The Second Amendment, among other things, amends the covenant therein with respect to the satisfaction of certain milestones during the course of the Chapter 11 Cases, by extending the date of certain of such milestones, including milestones relating to the date by which an auction of the Debtors’ assets must occur and the date by which any such resulting sale of the Debtors’ assets must close, in each case subject to receiving one or more qualifying bids from potential buyers.

The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the First Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Mutual Termination of Restructuring Support Agreement

As previously disclosed and in connection with the Chapter 11 Cases, on June 28, 2020, the Company and the Filing Subsidiaries (the “Debtors”) entered into a Restructuring Support Agreement (“RSA”) with (i) the lenders under the Company’s revolving credit facility (other than Värde (as defined below)) (the “Consenting RBL Lenders”) and (ii) certain investment funds and entities affiliated with Värde Partners, Inc. (collectively, “Värde”).  The RSA contemplates that the Debtors, the Consenting RBL Lenders and Värde may mutually terminate the RSA.

The RSA contemplated a dual-track path in the Chapter 11 Cases whereby the Debtors would simultaneously pursue a chapter 11 plan sponsored by a new money investment from Värde while also preparing for a potential sales process if a chapter 11 plan sponsored by Värde could not be achieved by fifty (50) days after the commencement of the Chapter 11 Cases.  On August 17, 2020, the Company announced that Värde had declined to pursue a new money investment in the company to sponsor a chapter 11 plan of reorganization.  Accordingly, the Debtors immediately switched their focus to the pursuit of a process to sell substantially all of their assets.

Because of these developments, on August 21, 2020, the Debtors, the Consenting RBL Lenders and Värde entered into a Mutual Termination of the RSA (the “Mutual Termination”). The Mutual Termination, among other things, terminates the RSA but preserves certain provisions of the RSA that are intended to survive a mutual termination, including provisions regarding the commitments and obligations of the parties related to the approval of bidding procedures and pursuit of sale of substantially all the Debtors’ assets.

The foregoing description of the Mutual Termination does not purport to be complete and is qualified in its entirety by reference to the full text of the Mutual Termination, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.