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Gas Tycoon’s Aspen Ranch Hits Bankruptcy as Lender Feud Rages

Gas Tycoon’s Aspen Ranch Hits Bankruptcy as Lender Feud Rages

(Bloomberg) -- Natural gas tycoon Charif Souki has put his sprawling Colorado ranch into bankruptcy in order to repay lenders he alleges undermined earlier attempts to retire his personal debt and tanked the value of Tellurian Inc.

A holding company that owns Souki’s 813-acre property — known as Aspen Valley Ranch — entered Chapter 11 on Thursday. Bankruptcy is expected to pause a lawsuit Souki brought against his lenders earlier this year, halting creditor attempts to foreclose on the ranch and offering Souki a chance to sell the property in Chapter 11 at a higher price, according to court papers.

The bankruptcy filing is the latest development in a lengthy dispute related to $138 million of the energy magnate’s personal debt. Souki, who helped transform the US into a major supplier of liquefied natural gas, is executive chairman of LNG producer Tellurian. Shares in the company and the ranch back the debt at issue, which includes loans and interest.

The Aspen ranch has already garnered “substantial interest” from a potential buyer, according to bankruptcy filings. Advisers working on the proceeding want to hold a September auction should competing bids materialize in the coming weeks.

The dispute between Souki and his lenders has been brewing for years. Tellurian was on the verge of bankruptcy at the start of the Covid-19 pandemic, when demand for oil and gas plummeted, according to papers filed on behalf of Souki, a family trust as well as two closely held companies Souki owns that filed Chapter 11. Souki and his associates helped Tellurian repay debt it took on in the early days of the pandemic but his lenders began pressing him to repay his loans in full soon after, according to court documents.

Market Timing

Souki and his lenders dispute when each side had the ability to sell his Tellurian shares and in court filings provide dueling justifications for why the company’s stock has declined. Souki claims lenders took “exclusive control” of his stock more than two years ago, transferred the stock to creditor accounts in February and then began unloading their position, which caused Tellurian’s share price to tumble.

The sales netted lenders about $37 million, but they could have made as much as $158 million if they sold at the right time, Souki claims. Lenders seized other assets as well, including Souki’s custom sailboat — which he claims was sold at significantly less than market value. 

Parties involved in the litigation include investment adviser UBS O’Connor LLC and administrative agent Wilmington Trust National Association.

Lenders have denied Souki’s allegations and sought to dismiss his lawsuit, alleging in a Tuesday filing in New York court that it’s a last-ditch attempt to get out of repaying his debt. Creditors say they began to foreclose on the stock after Tellurian’s shares plummeted in 2022 following reports that the company was struggling to get financing for its Driftwood LNG terminal. Lenders claim they didn’t sell the stock earlier because they were attempting to work cooperatively with Souki.

Lawyers representing Souki and the bankrupt company that owns the Aspen ranch didn’t return messages Friday seeking comment. Tellurian didn’t immediately respond to a request for comment. A Wilmington spokesman said the firm is serving as a trustee in litigation and declined to provide further comment.


Jonathan Randles I BNN Bloomberg I July 28, 2023

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