Case Document 3563 Filed in TXSB on 06/24/15 Page 1 of 13

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1 Case Document 3563 Filed in TXSB on 06/24/15 Page 1 of 13 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: Case No ATP OIL & GAS CORPORATION, CHAPTER 7 Debtor, MOTION TO COMPROMISE CONTROVERSY UNDER BANKRUPTCY RULE 9019 THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. Rodney Tow, Trustee (the Trustee ), hereby files this Motion to Compromise Controversy with HBK Main Street Investments, L.P., Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P., under Rule 9019 of the Federal Rules of Bankruptcy Procedure. I. SUMMARY OF RELIEF REQUESTED 1. The Trustee seeks approval of a proposed settlement reached between the Trustee in two Adversary proceedings related to overriding royalty interests ( ORRI ). Settlements have been reached in Adversary ; Rodney Tow, Trustee v. HBK Main Street Investments, L.P.; pending in the United States Bankruptcy Court, Southern District of Texas, and Adversary MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 1 of 13 D/928522v1

2 Case Document 3563 Filed in TXSB on 06/24/15 Page 2 of 13 No ; Rodney Tow, Trustee v. Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P.; pending in the United States Bankruptcy Court, Southern District of Texas. 2. Under the proposed settlement, the Trustee will release his claims against HBK Main Street Investments, L.P. in exchange for a cash payment of $825, and against Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P. for a cash payment of $825,000.00, as detailed below. II. JURISDICTION AND VENUE 3. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C and III. ADVERSARIES TO BE COMPROMISED 4. ATP was a corporation engaged in, among other things, the acquisition, development, and production of oil and natural gas reserves from and on federal leases issued on United States of America property on the Outer Continental Shelf ( OCS ) in the Gulf of Mexico for which ATP was the lessee. 5. On August 17, 2012, ATP filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, commencing Case No ( Bankruptcy Case ) in the United States Bankruptcy Court for the Southern District of Texas. 6. On June 26, 2014, the Bankruptcy Case was converted to a Chapter 7 proceeding, and Rodney D. Tow was appointed Trustee for ATP. MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 2 of 13 D/928522v1

3 Case Document 3563 Filed in TXSB on 06/24/15 Page 3 of 13 A. The HBK Litigation 7. On August 29, 2014, the Trustee filed a complaint in Adversary No in the United Bankruptcy Court, Southern District of Texas asserting various Chapter 5 causes of action against HBK Main Street Investments, L.P. (herein HBK ) related to payments of money from ATP both before and after the Petition Date. 8. HBK contends that on March 1, 2012, ATP and HBK entered into the Conveyance of a Term Overriding Royalty Interest (the Conveyance ) pursuant to which ATP purportedly granted HBK an express overriding royalty interest in the OCS Leases (the Term ORRI ). HBK contends that the Conveyance specified that the Term ORRI constitutes a production payment under the United States Bankruptcy Code and is subject to the safe harbor provision found in Section 541(b)(4)(B). 9. The Trustee contended that there was not a transfer of a real property interest, but a loan to ATP. The Trustee alleged that these payments of money were repayment of a debt and avoidable under Sections 547 and In his First Amended Complaint (Adv. No ; Dkt. No. 8), the Trustee asserted claims for: (i) declaratory judgment that the Conveyance was a disguised financing arrangement; (ii) declaratory judgment that the Conveyance constituted an unexpired lease under Section 365 of the Bankruptcy Code; (iii) declaratory judgment that the Term ORRI is not excluded from the ATP bankruptcy estate by Section 541(b)(4)(B); (iv) avoidance and recovery of postpetition transactions; (v) avoidance and recovery of preferential transfers; and (vi) avoidance and recovery of fraudulent transfers under 11 U.S.C. 502(d), 11 U.S.C. 548(a)(1)(A), 11 USC 544, and/or TEX. BUS. & COM. CODE and (a). MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 3 of 13 D/928522v1

4 Case Document 3563 Filed in TXSB on 06/24/15 Page 4 of HBK filed its Rule 12(b)(6) Motion to Dismiss and Brief in Support (the Motion to Dismiss ) (Adv. No ; Dkt No. 7) on October 23, 2014, seeking dismissal of all claims on the grounds that the Term ORRI falls within the Section 541(b)(4)(b) safe harbor of the United States Bankruptcy Code and is therefore not property of the ATP bankruptcy estate, and seeking dismissal of the Trustee s purported Section 365 claims and fraudulent transfer claims for failure to state a claim. 12. On March 10, 2015, the Court filed its Order on the Motion to Dismiss (the Original Order ) (Adv. No ; Dkt No. 29) and Memorandum Opinion (Adv. No ; Dkt No. 28), dismissing the Trustee s Section 365 claims and ordering that all other claims asserted in Trustee s Amended Complaint remain for further adjudication. 13. Subsequently, on March 26, 2015 the Court entered the Amended Order (Adv. No ; Dkt No. 38) ordering that both Trustee s Section 365 claims and fraudulent transfer claims (the Dismissed Claims ) were dismissed from the lawsuit, while all other claims asserted in Trustee s Amended Complaint (the Remaining Claims ) remain for further adjudication. B. Proposed Settlement with HBK 14. As a result of negotiations, and in recognition of the costs, uncertainty, and delay associated with litigation and in the interest of resolving all ongoing disputes between the Debtor and HBK, the parties have entered into a proposed settlement. ( Stipulation attached as Ex. 1) 15. Specifically, as set forth in more detail in the Stipulation filed on June 1, 2015, the Parties agree that HBK will pay the Trustee a one-time lump sum payment of eight hundred twenty-five thousand U.S. dollars ($825,000.00), which will reflect consideration for settlement of the Trustee s 11 U.S.C. 547(b) claim in the amount of six hundred sixty thousand U.S. MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 4 of 13 D/928522v1

5 Case Document 3563 Filed in TXSB on 06/24/15 Page 5 of 13 dollars ($660,000.00), and consideration of one hundred sixty-five thousand U.S. dollars ($165, ) for settlement of all of the Trustee s additional claims in this lawsuit. 16. In return, upon entry of an order approving this Compromise, Trustee will voluntarily dismiss all remaining claims in the lawsuit with prejudice. The Trustee will further agree not to challenge or contest in any proceeding or forum HBK s assertion that the purported Term ORRI at issue in the adversary proceeding transferred a real property interest to HBK. 17. The Trustee s agreed dismissal of the claims in the adversary proceeding against HBK will not preclude the Trustee from arguing that any similar or identical purported ORRI issued to parties other than HBK are the property of the ATP bankruptcy estate, constitute a disguised financing, or are not a transfer of real property. C. Sankaty Litigation 18. On August 29, 2014, the Trustee filed a complaint in Adversary No in the United Bankruptcy Court, Southern District of Texas asserting various Chapter 5 causes of action against Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P. (herein collectively Sankaty ) related to payments of money from ATP both before and after the Petition Date. 19. Sankaty contends that on March 1, 2012, ATP and HBK entered into the Conveyance of a Term Overriding Royalty Interest (the Conveyance ) pursuant to which ATP purportedly granted HBK an express overriding royalty interest in the OCS Leases (the Term ORRI ). Sankaty contends that the Conveyance specifies that the Term ORRI constitutes a production payment under the United States Bankruptcy Code and is subject to the safe harbor provision found in Section 541(b)(4)(B). MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 5 of 13 D/928522v1

6 Case Document 3563 Filed in TXSB on 06/24/15 Page 6 of The Trustee contended that there was not a transfer of a real property interest, but a loan to ATP. The Trustee alleged that these payments of money were repayment of a debt and avoidable under Sections 547 and In his First Amended Complaint (Adv. No ; Dkt. No. 9), the Trustee asserted claims for: (i) declaratory judgment that the Conveyance was a disguised financing arrangement; (ii) declaratory judgment that the Conveyance constituted an unexpired lease under Section 365 of the Bankruptcy Code; (iii) declaratory judgment that the Term ORRI is not excluded from the ATP bankruptcy estate by Section 541(b)(4)(B); (iv) avoidance and recovery of postpetition transactions; (v) avoidance and recovery of preferential transfers; and (vi) avoidance and recovery of fraudulent transfers under 11 U.S.C. 502(d), 11 U.S.C. 548(a)(1)(A), 11 USC 544, and/or Tex. Bus. & Com. Code Ann and (a). 22. Sankaty filed its Rule 12(b)(6) Motion to Dismiss and Brief in Support (the Motion to Dismiss ) (Adv. No ; Dkt No. 8) on October 31, 2014, seeking dismissal of all claims on the grounds that the Term ORRI falls within the Section 541(b)(4)(b) safe harbor of the United States Bankruptcy Code and is therefore not property of the ATP bankruptcy estate, and seeking dismissal of the Trustee s purported Section 365 claims and fraudulent transfer claims for failure to state a claim. 23. On March 10, 2015, the Court filed its Order on the Motion to Dismiss (the Original Order ) (Adv. No ; Dkt No. 28) and Memorandum Opinion Adversary No ; Dkt No. 27), dismissing the Trustee s Section 365 claims and ordering that all other claims asserted in Trustee s Amended Complaint remain for further adjudication. 24. Subsequently, on March 26, 2015 the Court entered the Amended Order (Adv. No ; Dkt No. 37) ordering that both the Trustee s Section 365 claims and fraudulent MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 6 of 13 D/928522v1

7 Case Document 3563 Filed in TXSB on 06/24/15 Page 7 of 13 transfer claims (the Dismissed Claims ) were dismissed from the lawsuit, while all other claims asserted in the Trustee s Amended Complaint (the Remaining Claims ) remain for further adjudication. D. Proposed Settlement with Sankaty 25. As a result of negotiations, and in recognition of the costs, uncertainty, and delay associated with litigation and in the interest of resolving all ongoing disputes between the Debtor and Sankaty, the parties have entered into a proposed settlement. ( Stipulation attached as Ex. 2) 26. Specifically, as set forth in more detail in the Stipulation filed on June 1, 2015, the Parties agree that Sankaty will pay the Trustee a one-time lump sum payment of eight hundred twenty-five thousand U.S. dollars ($825,000.00), which will reflect consideration for settlement of the Trustee s 11 U.S.C. 547(b) claim in the amount of six hundred sixty thousand U.S. dollars ($660,000.00), and consideration of one hundred sixty-five thousand U.S. dollars ($165, ) for settlement of all of the Trustee s additional claims in this lawsuit. 27. In return, upon entry of an order approving this Compromise, the Trustee will voluntarily dismiss all remaining claims in the lawsuit with prejudice. The Trustee will further agree not to challenge or contest in any proceeding or forum Sankaty s assertion that the purported Term ORRI at issue in the adversary proceeding transferred a real property interest to Sankaty. 28. The Trustee s agreed dismissal of the claims in the adversary proceeding against Sankaty will not preclude the Trustee from arguing that any similar or identical purported ORRI issued to parties other than Sankaty are the property of the ATP bankruptcy estate, constitute a disguised financing, or are not a transfer of real property. MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 7 of 13 D/928522v1

8 Case Document 3563 Filed in TXSB on 06/24/15 Page 8 of 13 IV. FACTORS TO CONSIDER FOR THE MERITS OF COMPROMISE 29. Pursuant to Section 105(a) of the Bankruptcy Code and Rule 9019(a) of the Bankruptcy Rules, this Court may approve a compromise or settlement agreement. 30. One of the goals of Congress in fashioning the Bankruptcy Code was to encourage parties in a distress situation to work out a deal among themselves. In re Mirant Corp., 334 B.R. 800, 811 (Bankr. N.D. Tex. 2005). Compromises are favored in bankruptcy because they minimize litigation costs and further the parties interest in expediting the administration of a bankruptcy case. Martin v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996) (quoting 9 COLLIER ON BANKRUPTCY [1] (15th ed. Rev. 1993)). 31. Bankruptcy Rule 9019 governs the procedural requirements to be followed before a settlement may be approved. Bankruptcy Rule 9019(a) provides in relevant part that: [o]n motion by the trustee and after notice and a hearing, the court may approve a compromise and settlement. FED. R. BANKR. P. 9019(a). Rule 9019(a) empowers a bankruptcy court to approve compromises and settlements if they are fair and equitable and in the best interest of the estate. In re Cajun Elec. Power Coop., Inc., 119 F.3d 349, 355 (5th Cir. 1997); Conn. Gen. Life Ins. Co. v. United Cos. Fin. Corp. (In re Foster Mortgage Corp.), 68 F.3d 914, 917 (5th Cir. 1995). Moreover, Bankruptcy Code Section 105(a) provides that [t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). 32. Approval of a proposed settlement is left to the sound discretion of the reviewing court. See, e.g., In re Hibbard Brown & Co., Inc., 217 B.R. 41, 46 (Bankr. S.D.N.Y. 1998) (noting that courts should exercise their discretion in light of the general public policy favoring settlements. ). The burden of establishing the fairness of a compromise rests on the proponent(s) MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 8 of 13 D/928522v1

9 Case Document 3563 Filed in TXSB on 06/24/15 Page 9 of 13 of the compromise; however, a trustee is not required to present a full mini-trial or evidentiary hearing to adjudicate the issues being settled. Rather, when determining whether to approve an agreement, the Court is not to decide the numerous questions of law and fact raised by the compromise, but is to canvass the issues and see whether the settlement falls below the lowest point in the range of reasonableness. ARS Brook, LLC v. Jalbert (In re ServiSense.com, Inc.), 382 F.3d 68, 72 (1st Cir. 2004); Vaughn v. Drexel Burnham Lambert Group, Inc. (In re Drexel Burnham Lambert Group, Inc.), 134 B.R. 499, 505 (Bankr. S.D.N.Y. 1991). 33. Further, in ruling on the propriety of the settlement agreement, the Court should determine whether the settlement agreement is in the best interests of the bankruptcy estate. See Conn. Gen. Life Ins. Co. v. United Cos. Fin. Corp. (In re Foster Mortgage Corp.), 68 F.3d 914, 917 (5th Cir. 1995); U.S. v. Aweco, Inc. (In re Aweco, Inc.), 725 F.2d 293, 298 (5th Cir. 1984), cert, denied, 469 U.S. 880 (1984). To make such a determination, the Court should compare the relative strengths and weaknesses of each party s claims and the probability of success for each of the parties should the claims and disputes continue to be litigated. 34. The merits of a proposed compromise should be judged under the criteria set forth in Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968). TMT Trailer requires that a compromise must be fair and equitable. 390 U.S. at 424; In re AWECO, Inc., 725 F.2d 293, 298 (5th Cir.), cert. denied, 469 U.S. 880 (1984). The terms fair and equitable mean that (i) senior interests are entitled to full priority over junior interests; and (ii) the settlement is reasonable in relation to the likely rewards of litigation. In re Cajun Electric Power Coop., 119 F.3d 349, 355 (5th Cir. 1997). 35. In determining whether a proposed compromise is fair and equitable, a Court should consider the following factors: MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 9 of 13 D/928522v1

10 Case Document 3563 Filed in TXSB on 06/24/15 Page 10 of 13 (i) (ii) (iii) (iv) the probabilities of ultimate success should the claim be litigated; the complexity, expense, and likely duration of litigating the claim; the difficulties of collecting a judgment rendered from such litigation; and, all other factors relevant to a full and fair assessment of the wisdom of the compromise. TMT Trailer, 390 U.S. at 424. The Trustee believes that the proposed settlement satisfies the requirements established by the Supreme Court in TMT Trailer. V. ANALYSIS OF PROPOSED COMPROMISE 36. Probabilities of Ultimate Success. The Trustee believes that ultimately there would not be a high chance of success if the HBK and Sankaty Adversaries were fully litigated. There are aspects of these two cases not found in the other ORRI Adversaries that make recovery less likely for the Estate. 37. Complexity, Expense and Likely Duration. There is a high probability that HBK and Sankaty will appeal the Court s order denying dismissal of the Remaining Claims to the District Court and potentially directly to the Fifth Circuit. Because the Remaining Claims potentially present novel legal issues of first impression, adjudication of those appeals will likely be time-consuming and expensive, and potentially have a negative effect on other ORRI litigation being pursued by the Trustee. 38. Other Factors. The Trustee believes that settling the HBK and Sankaty litigation is fair and in the best interest of the Estate. Additionally, the Proposed Settlement does not affect any claims in other ORRI litigation. 39. The total amount received as consideration for the Trustee s claims is reasonable in light of the likely costs and time expenditure that would accompany litigation. MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 10 of 13 D/928522v1

11 Case Document 3563 Filed in TXSB on 06/24/15 Page 11 of Full litigation of the Remaining Claims would require intensive analysis of relatively unexamined areas of law as well as discovery, which would include depositions of various fact witnesses because of the significant disputed issues. 41. Because of the significant cost and delay associated with prosecution of the Remaining Claims, Trustee believes that all of the relevant factors militate in favor of the approval of the Compromise. 42. Resolving the matters now, on the other hand, allows the Trustee to ensure tangible and immediate benefit to the estate. Under the circumstances, the Trustee believes this factor supports the proposed compromise. VI. PRAYER 43. The Trustee therefore submits that the Stipulation satisfies the requirements established under Bankruptcy Rule 9019, the Supreme Court in TMT Trailer Ferry, and applicable law. In light of these considerations, the Trustee believes that the Stipulation falls well within the range of reasonableness, especially in light of the practical reality that compromises are... often times desirable and wise methods of bringing to a close proceedings otherwise lengthy, complicated and costly. Rivercity v. Herpel (In re Jackson Brewing Co.), 624 F.2d 599, 602 (5th Cir. 1980) (quoting Case v. Los Angeles Lumber Prods. Co., 308 U.S. 106, 130 (1939)). Consequently, the Trustee respectfully requests that the Court grant this Motion and approve the Stipulation. WHEREFORE, PREMISES CONSIDERED, Rodney Tow, Chapter 7 Trustee for the Bankruptcy Estate of ATP Oil & Gas Corporation respectfully requests that this Court approve the proposed settlements and compromise set forth above and for such other and further relief, at law and in equity, as this Court deems just. MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 11 of 13 D/928522v1

12 Case Document 3563 Filed in TXSB on 06/24/15 Page 12 of 13 Respectfully Submitted, By: /s/ T. Micah Dortch TIMOTHY MICAH DORTCH State Bar No SDTX Bar No COOPER & SCULLY, P.C. 900 Jackson Street, Suite 100 Dallas, Texas Telephone: (214) Facsimile: (214) ATTORNEY IN CHARGE FOR PLAINTIFF RODNEY TOW, TRUSTEE OF COUNSEL: COOPER & SCULLY, P.C. R. BRENT COOPER State Bar No SDTX Bar No Jackson Street, Suite 100 Dallas, Texas Telephone: (214) Facsimile: (214) CHRISTOPHER D. LINDSTROM State Bar No SDTX Bar No.: Walker, Suite 1040 Houston, Texas Telephone: (713) Facsimile: (713) MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 12 of 13 D/928522v1

13 Case Document 3563 Filed in TXSB on 06/24/15 Page 13 of 13 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing has been served on all parties on the attached service list, including parties requesting notice, via either ECF notification or via first class mail, proper postage affixed, on the 24 th day of June, /s/ Timothy Micah Dortch TIMOTHY MICAH DORTCH MOTION TO COMPROMISE CONTROVERSY UNDER RULE 9019 Page 13 of 13 D/928522v1

14 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 1 of 1 of 6 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION INRE: ATP OIL & GAS CORPORATION Debtor CASE NO CHAPTER 7 RODNEY TOW, TRUSTEE Plaintiff v. HBK MAIN STREET INVESTMENTS, L.P. Defendant ADVERSARY NO STIPULATION RESOLVING ADVERSARY PROCEEDING This stipulation (the "Stipulation") is made by and among (i) HBK Main Street Investments, L.P. ("HBK") and (ii) Rodney Tow, the Chapter 7 Trustee of the estate of ATP Oil & Gas Corporation ("Trustee") (together, the "Parties"). RECITALS A. The Conveyance WHEREAS, HBK contends on March 1, 2012, ATP and HBK entered into the Conveyance of a Term Overriding Royalty Interest (the "Conveyance") pursuant to which ATP granted HBK an express overriding royalty interest in the OCS Leases (the "Term ORRI"); EXHIBIT 1 STIPULATION RESOLVING ADVERSARY PROCEEDING 1

15 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 2 of 2 of 6 6 WHEREAS, HBK contends the Conveyance specifies that the Term ORRI constitutes a "production payment" under the United States Bankruptcy Code and is subject to the safe harbor provision found in Section 541(b)(4)(B); B. The Bankruptcy and the Adversary Proceeding WHEREAS, on August 17, 2012 (the "Petition Date"), ATP filed its voluntary Chapter 11 petition for relief, which was subsequently converted to a Chapter 7 Bankruptcy on June 26, 2014; WHEREAS, on August 29, 2014, Trustee filed this adversary proceeding (the "Original Complaint") and subsequently filed its amended complaint on November 20, 2014 (the "Amended Complaint"); WHEREAS, in the Amended Complaint, Trustee asserted claims for: (i) declaratory judgment that the Conveyance was a disguised financing arrangement; (ii) declaratory judgment that the Conveyance constituted an unexpired lease under Section 365 of the Bankruptcy Code; (iii) declaratory judgment that the Term ORRI is not excluded from the ATP bankruptcy estate by the Section 541(b)(4)(B) safe harbor; (iv) avoidance and recovery ofpostpetition transactions; (v) avoidance and recovery of preferential transfers; and (vi) avoidance and recovery of fraudulent transfers under 11 U.S.C. 502(d), 11 U.S.C. 548(a)(1)(A), 11 USC 544, and/or Tex. Bus. & Com. Code Ann and (a); WHEREAS, HBK filed its Rule 12(b)(6) Motion to Dismiss and Brief in Support (the "Motion to Dismiss") on October 23, 2014, seeking dismissal of all claims on the grounds that the Term ORRI falls within the Section 54l(b)(4)(b) safe harbor of the United States Bankruptcy Code and is therefore not property of the ATP bankruptcy estate, and seeking dismissal of Trustee's purported Section 365 claims and fraudulent transfer claims for failure to state a claim; STIPULATION RESOLVING ADVERSARY PROCEEDING 2

16 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 3 of 3 of 6 6 WHEREAS, on March 10, 2015, the Court filed its Order on the Motion to Dismiss (the "Original Order") and Memorandum Opinion, dismissing Trustee's Section 365 claims and ordering that all other claims asserted in Trustee's Amended Complaint remain for further adjudication; WHEREAS, on March 26, 2015 the Court entered the Amended Order ordering that both Trustee's Section 365 claims and fraudulent transfer claims (the "Dismissed Claims") were dismissed from the lawsuit, while all other claims asserted in Trustee's Amended Complaint (the "Remaining Claims") remain for further adjudication; WHEREAS, as a result of negotiations, and in recognition of the costs, uncertainty, and delay associated with litigation, the Parties have agreed to resolve all issues and disputes relating to the Remaining Claims subject to the terms and conditions set forth below (the "Settlement Agreement"). STIPULATIONS NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among the Parties, as follows: 1. Upon entry of an order approving this Stipulation, HBK will pay Trustee a onetime lump sum payment of eight hundred twenty five thousand U.S. dollars ($825,000.00), which will reflect consideration for settlement of Trustee's 11 U.S.C. 547(b) claim in the amount of six hundred sixty thousand U.S. dollars ($660,000.00) and consideration of one hundred sixty-five thousand U.S. dollars ($165, ) for settlement of all of Trustee's additional claims in this lawsuit against HBK. 2. Upon entry of an order approving this Stipulation, Trustee will voluntarily dismiss all Remaining Claims in this lawsuit with prejudice. Trustee will further agree not to challenge STIPULATION RESOLVING ADVERSARY PROCEEDING 3

17 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 4 of 4 of 6 6 or contest in any proceeding or forum HBK's assertion that the Term ORRI at issue in this lawsuit transferred a real property interest to HBK. Trustee's agreed dismissal of the claims in this lawsuit will not preclude Trustee from arguing that any similar or identical purported ORRI issued to parties other than HBK are the property of the ATP bankruptcy estate, constitute a disguised financing, or are not a transfer of real property. 3. Upon entry of an order approving this Stipulation, except as provided herein and except with respect to the rights and obligations under this Stipulation, the Parties shall be deemed to have forever waived, released, acquitted and discharged one another, including each Party's current, former or future officers, directors, employees, stockholders, beneficiaries, agents, servants, assigns, successors, predecessors, representatives, members, financial advisors, industry experts/advisors, attorneys, trustees, partners, subsidiaries, parent entities and affiliates, each in their capacity as such and in no other capacity, from any and all claims, demands, debts, objections to claims, obligations, damages, losses or liabilities whatsoever of any nature, type or description, whether known or unknown, suspected or unsuspected, concealed or hidden, direct or indirect, patent or latent, fixed or contingent, arising out of or relating to any cause, matter or thing from the beginning of time through the date of this Stipulation, pertaining in any way to this lawsuit. 4. This Stipulation shall not become effective unless and until it is approved by the Court. In the event that this Stipulation is not approved by the Court, nothing contained herein shall be deemed to be a waiver of any claims or objections of, or an admission of liability by, any Party hereto and, in such event, all rights of the Parties shall be preserved. 5. This Stipulation may not be modified other than by a signed writing executed by the Parties hereto or by further order of the Court. STIPULATION RESOLVING ADVERSARY PROCEEDING 4

18 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 5 of 5 of This Stipulation comprises the entire agreement between the Parties in respect of the subject matter hereof. 7. Each person who executes this Stipulation on behalf of a Party hereto represents that he or she is duly authorized to execute this Stipulation on behalf of such Party. 8. This Stipulation may be executed in multiple counterparts, each of which shall be deemed an original but all of which when taken together shall constitute one and the same instrument. 9. The Parties shall bear their own attorneys' fees and costs relating to and arising from this Stipulation. 10. This Stipulation shall be binding upon and shall inure to the benefit of the successors, heirs, assigns, agents, employees, and representatives of the Parties hereto. 11. The Court shall retain jurisdiction over the Parties hereto with respect to this Stipulation, including, without limitation, for purposes of interpreting and implementing and enforcing its terms and conditions. STIPULATION RESOLVING ADVERSARY PROCEEDING 5

19 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 6 of 6 of 6 6 Dated: May_, 2015 By: Is/ Marty L. Brimmage Charles R. Gibbs (SBN: ) Marty L. Brimmage, Jr. (SBN: ) David F. Staber (SBN: ) Lacy M. Lawrence (SBN: ) AKIN GUMP STRAUSS HAUER & FELD LLP 1700 Pacific A venue, Suite 4100 Dallas, Texas (214) (Telephone) (214) (Facsimile) COUNSEL FOR HBK MAIN STREET INlrES~S,L.P. By:_c ~-~ 1/c_c /; ===- Christopher D. Lindstrom (SBN: ) Timothy Micah Dortch (SBN: ) R. Brent Cooper. (SBN: ) Lauren Tow (SBN: ) COOPER & SCULLY, P.C 700 Louisiana, Suite 3850 Houston, Texas (713) (Telephone) (713) (Facsimile) ATTORNEYS IN CHARGE FOR RODNEY TOW, TRUSTEE STIPULATION RESOLVING ADVERSARY PROCEEDING 6

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25 Case Case Document Filed Filed in in TXSB on on 06/01/15 06/24/15 Page Page 6 of 6 of 6 6

26 Case Document Filed in TXSB on 06/24/15 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: ATP OIL & GAS CORPORATION, DEBTOR. CASE NO CHAPTER 7 JUDGE ISGUR ORDER ON MOTION TO COMPROMISE CONTROVERSY UNDER BANKRUPTCY RULE 9019 On this date, the Court considered Trustee Rodney Tow s Motion to Compromise Controversy Under Bankruptcy Rule 9019 with HBK Main Street Investments, L.P. and Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P. The Court finds that the settlement with HBK Main Street Investments attached as Exhibit 1 to the Motion to Compromise Controversy Under Bankruptcy Rule 9019 is fair and equitable and complies with the factors established by the Supreme Court in Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968). As such, Trustee Rodney Tow s Motion to Compromise Controversy Under Bankruptcy Rule 9019 is GRANTED. The Court finds that the settlement with Sankaty ATP L.L.C., Sankaty Credit Opportunities IV, L.P., and Sankaty Managed Account (UCAL), L.P. attached as Exhibit 2 to the Motion to Compromise Controversy Under Bankruptcy Rule 9019 is fair and equitable and complies with the factors established by the Supreme Court in Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968). As such, Trustee Rodney Tow s Motion to Compromise Controversy Under Bankruptcy Rule 9019 is GRANTED. ORDER ON MOTION TO COMPROMISE CONTROVERSY Page 1 of 2 UNDER BANKRUPTCY RULE 9019 D/928523v1

27 Case Document Filed in TXSB on 06/24/15 Page 2 of 2 SIGNED this day of, THE HONORABLE MARVIN ISGUR UNITED STATES BANKRUPTCY JUDGE ORDER ON MOTION TO COMPROMISE CONTROVERSY Page 2 of 2 UNDER BANKRUPTCY RULE 9019 D/928523v1