The Breitburn Debtors have examined the LL&E Claims and have determined that they are based on and related to the Texas Litigation.
The Confirmation Order includes the following provision:
The disposition of whether the Debtors’ agreement with LL&E Royalty Trust (the Conveyance of Overriding Royalty Interests) is subject to rejection under section 365 of the Bankruptcy Code shall be deferred, with the rights of all parties reserved, pending a determination of the issues to be adjudicated in the Texas Court as defined in, and as set forth in, the [Lift Stay Order]. Nothing shall preclude the parties from seeking any relief in the Bankruptcy Court that is not inconsistent with the Lift Stay Order.
Each of the LL&E Claims was either (i) filed by LL&E based on claims asserted in the Texas Litigation, or (ii) filed by The Bank of New York Mellon Trust Company, N.A., as former trustee of LL&E., to preserve its asserted right of contribution against certain of the Debtors in connection with the Texas Litigation. To prevent the possible deemed allowance of the LL&E Claims, and in accordance with the deadline to object to proofs of claim, the Debtors file this Objection to the LL&E Claims to reserve and preserve their rights pending the adjudication of the matters to be adjudicated in the Texas Litigation in accordance with the Lift Stay Order and to reserve and preserve their rights as to further proceedings in the Bankruptcy Court with respect to the LL&E Claims.
However, the Conveyance, which by its terms is governed by Texas law, does not constitute an executory contract or unexpired lease for purposes of Section 365 of the Bankruptcy Code. Rather, the Conveyance is a conveyance of real property under Texas law, and is therefore not subject to assumption, rejection, or cure.
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