Gulfport Appalachia Inadvertently Transfers Over $2Million to a Coal Mining Company, Now Seeks Turnover Under §542(a) and § 362(a) of the Bankruptcy Code
February 12, 2021, Southern District of Texas – Gulfport Appalachia, LLC (“Gulfport” or “Debtor”), an oil and gas exploration and production company, sues American Consolidated Natural Resources (formerly Murray) (“ACNR” or “Defendant”) for transfers over $2 million, alleging that ACNR is in continual, willful possession of the Debtor’s property in violation of 11 U.S.C. § 362 and that property or its equivalent value must be immediately returned to the Debtor under 11 U.S.C. § 542.
By way of background, Gulfport mistakenly sent three royalty checks worth $2,497,135.83 to Murray Energy Holdings Co, (now, ACNR), a few days before Murray’s bankruptcy. After a few days, when Gulfport realized its mistake, it immediately informed Murray about the error, requested a stop payment on the checks (which request was made too late), and requested that Murray (and later ACNR) return the funds. However, no funds were allegedly returned to Gulfport, despite repeated efforts.
Subsequently, Gulfport filed for bankruptcy and the plaintiff brought an action according to 11 U.S.C. § 542(a), to recover from ACNR property of the estate (or the value of such property) wrongfully held by Defendant. The plaintiff argues that ACNR is knowingly exercising control over the funds and is impermissibly withholding estate property from the Debtor in violation of 11 U.SC. §362(a). Thus, the plaintiff contends that under 11 U.S.C. § 105(a), it is entitled to recover actual damages equal to any diminution in the funds, plus interest and attorneys’ fees.
The case is In re Gulfport Energy Corporation, et al under case no. 20-35562-DRJ in the United States Bankruptcy Court for Southern District of Texas. Honorable Bankruptcy Judge David R Jones is presiding over the Debtor’s bankruptcy case.