Yuma Energy Inc. filed for Chapter 11 bankruptcy with plans to liquidate after the Houston-based E&P company said its cash position deteriorated amid an unprecedented oil market crash.

Historically, Yuma’s activities have focused on inland and onshore properties, primarily located in central and southern Louisiana and southeastern Texas. The final straw for the company came during the first quarter when the oil market collapse left Yuma unable to cover its operating costs with cash flow from its operations, said Interim CEO Anthony C. Schnur, who resigned, effective April 10.

“Our revenues and cash position have eroded to the point of unsustainability primarily driven by the severe downturn in oil prices,” said Schnur, who was recently hired by Ankura Consulting Group which the company has engaged as its financial adviser.

According to Schnur, Yuma had taken proactive steps in 2019 and early 2020 to recapitalize its financial structure under a credit agreement with YE Investment LLC and a restructuring and exchange agreement with Red Mountain Capital Partners LLC.

“Unfortunately, YE recently notified us that it was terminating the credit agreement due to the company’s failures to make timely interest payments and to comply with other covenants, and further, that it was also accelerating all payments due under the credit agreement so that all outstanding principal, accrued interest, fees and other obligations under the credit agreement became immediately due and payable,” he said. “Simultaneous with the termination of the credit agreement, Red Mountain notified us that it was terminating the restructuring agreement.”

Creditors will now seek immediate court approval to conduct an auction for substantially all of Yuma’s assets, which primarily consist of operating and nonoperating interests in several properties in Louisiana, Texas, Wyoming and Oklahoma. The auction is expected to occur within the first 90 days of the bankruptcy filings.

At Ankura, Schnur will oversee the operation of the creditors during the bankruptcy process.

Seaport Gordian Energy LLC, an affiliate of Seaport Global Holdings LLC, has been engaged as the investment banker for the company. FisherBroyles  LLP will serve as Yuma’s legal adviser.

The Yuma bankruptcy filing was made in the U.S. Bankruptcy Court for the Northern District of Texas.

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