Delaware Court Holds Rejection Eliminates Non-debtor's Exclusive Right to Provide Services to the Debtor

Summary

This article discusses a recent case where the district court clarified a non-debtor's exclusivity rights post-rejection of its contract with the debtor. Nine Point Energy Holdings, Inc. and its affiliates (collectively referred to as Nine Point or the Nine Point debtors) constituted an oil and gas production and exploration company that sought to reorganize in Chapter 11 through a going concern sale of substantially all of their assets. To maximize value, Nine Point sought to sell those assets free and clear of its midstream services contracts, which included provisions that prevented Nine Point from acquiring midstream services from anyone other than its counterparty, Caliber North Dakota, LLC (Caliber). The dispute over Nine Point's ability to do so was the driving factor in its bankruptcy case.