Davis Polk is advising Southcross Energy Partners, L.P., its general partner, and 25 of its subsidiaries (collectively, “Southcross”) in connection with their restructuring under chapter 11 of the United States Bankruptcy Code. Southcross intends to use the restructuring process to evaluate a range of strategic options, including a sale of the business, the divestiture of certain assets and a standalone restructuring plan that would strengthen its financial position and facilitate future growth.

On April 1, 2019, Southcross filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. At an uncontested hearing on April 2, 2019, Judge Mary F. Walrath approved Southcross’s debtor-in-possession financing on an interim basis and granted Southcross all of its requested relief, including the authority to pay all trade creditors in the ordinary course of business.

In connection with the chapter 11 filings, Southcross entered into a $255 million DIP credit facility with certain of its prepetition term lenders (including funds managed by Solus Alternative Asset Management LP and Sound Point Capital Management, L.P.), certain pre-petition revolving lenders as issuing banks, and Wilmington Trust, N.A. as administrative agent. The DIP credit agreement includes a $72.5 million new money term loan facility, a $55 million letter of credit term loan facility to cash collateralize letters of credit (including approximately $25 million of existing letters of credit) and a $127.5 million junior roll-up term loan facility, of which $55 million of the new money term loan facility and all of the roll-up term loan facility will become available only after the entry by the Bankruptcy Court of a final DIP order. The proceeds of the DIP credit facility will be used to support Southcross’s business during the reorganization, pay administrative expenses of the chapter 11 cases and make adequate protection payments to prepetition secured lenders.

Based in Dallas, Texas, Southcross is a publicly traded company that provides midstream services to natural gas producers and customers, including natural gas gathering, processing, treatment, and compression and access to natural gas liquid fractionation and transportation services. Southcross’s assets and operations are concentrated in and near the resource-rich Eagle Ford Shale region of South Texas and it also owns and operates pipelines in Mississippi and Alabama.

The Davis Polk restructuring team includes partners Marshall S. Huebner and Darren S. Klein, counsel Steven Z. Szanzer and Jon Finelli and associates Benjamin M. Schak, Stephanie Massman and Daniel E. Meyer. The finance team includes partner Jinsoo H. Kim and associates Christopher W. Holt and Matthew S. Scarano. All members of the Davis Polk team are based in the New York office.

Evercore Group L.L.C. is serving as Southcross’s investment banker and Alvarez & Marsal North America, LLC is serving as its restructuring adviser. Morris, Nicholas, Arsht & Tunnell LLP is serving as Southcross’s Delaware counsel.

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