Cougar Oil and Gas Canada, Inc. (COUGF.OB) has obtained an Order from the Alberta Court of Queen's Bench providing creditor protection under the Companies' Creditors Arrangement Act (Canada) or "CCAA".
On November 15, 2011, the potential purchaser under a Binding Letter of Intent to acquire some of the Company's non-core assets defaulted on its agreements. The sale of these assets would have removed a requirement to increase the ERCB LMR deposit. Because the potential purchaser asked for multiple extensions and placed a partial deposit, the Company agreed to several extensions of the closing. However, the potential purchaser did not meet the closing conditions or provide required pre-closing information to the ERCB.
As a result the ERCB prohibited the transfer of the wells and the potential purchaser defaulted on the purchase of the Company's none core assets. The delays in the acquisition process then resulted in the ERCB putting Cougar on notice to increase its LMR deposit.
To date, because the Company was not able to fund the $630,000 LMR deposit in a manner satisfactory to the ERCB, the ERCB has ordered the wells and facilities of the Company shut in until the LMR deposit is made and the ERCB requirements are met, Cougar Oil said.
The company said that it immediately appealed the order and is reviewing its options in seeking damages due to the default of the potential purchaser under the terms of the Binding Letter of Intent. The Company operations were shut in starting on January 23, 2012.
The company noted that its board has decided to seek CCAA protection after considering its currently available alternatives. The Court has granted CCAA protection until March 2, 2012, to be further extended as required and approved by the Court.
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