Natural Gas Pioneer Puts Investment Vehicle Into Bankruptcy
Summary
- Charif Souki put Strudel into chapter 11 to have an ‘orderly’ sale of its assets, including an 813-acre luxury ranch in Colorado
An investment vehicle owned by U.S. natural-gas entrepreneur Charif Souki has filed for bankruptcy and is suing its lenders to prevent foreclosure of its assets, including shares of a family-owned business and a luxury ranch.
Strudel Holdings said it sought protection from creditors Thursday so it can sell those assets “in an orderly manner at fair market value rather than having them disposed of in the commercially unreasonable manner."
Strudel, along with its bankrupt affiliate AVR AH, and Souki, also filed a lawsuit Thursday, accusing investment manager UBS O’Connor, administrative agent Wilmington Trust and lenders including Nineteen77 Capital Solutions of breach of duty of good faith and fair dealing.
Souki founded Cheniere Energy, the first exporter of liquefied natural gas in the contiguous U.S. He was ousted from his job as CEO in 2015 after Carl Icahn and other activist investors raised concerns about his pay and other executive practices. Souki then founded Tellurian, a Texas-based natural gas operator, in 2016 in his second venture to export natural gas.
In its lawsuit, Strudel said it believes the lenders have acted unreasonably after it defaulted on loans, which at one point reached more than $100 million.
Strudel, AVR and Souki had pledged certain assets as collateral in support of the loans, including the 813-acre Aspen Valley Ranch in Colorado, owned by AVR, and shares of another family business, commercial real estate company Ajax Holdings.
The lenders seized Souki’s sailboat, the Tango, last December and sold it for less than it was worth after making only nominal repairs, the lawsuit said. Souki hasn’t specified what repairs should have been made to the boat before it was sold, the defendants said.
In February, the lenders seized Souki’s Tellurian shares and sold them in the following months when the stock traded down. The lawsuit said the lenders breached their duty to sell the collateral at an opportune time, resulting in potential losses on their loans. If they had sold at a more opportune time, the lenders could have generated enough in proceeds to satisfy all amounts due under the loans, the lawsuit said.
In March, in a New York state court, Souki and Strudel sued the lenders, alleging they violated their loan agreements. Souki and Strudel said in the state lawsuit that the lenders, among other things, prevented Souki and Strudel from taking steps to pay down the debt and started charging higher interest rates.
In May, the state supreme court denied Souki’s request for a preliminary injunction that would protect the ranch and Ajax.
Strudel is seeking emergency court approval for its bid procedures for the ranch, which includes a barn, a pool house and recreational trails. In 2020, Souki was listing the ranch for $220 million.
Souki said the lenders blocked a potential sale by rejecting an offer for the ranch in May. Strudel said it was filing for bankruptcy to give itself breathing room to market its assets without the threat of foreclosure. The lawsuit will also help stall the lenders’ efforts to seize and sell the Ajax shares, Strudel said.
Earlier this week, lawyers for the lenders said in court filings that they used reasonable efforts to not cause any major disruptions in Tellurian’s stock price. They also said Souki’s allegation that they objected to certain ranch buyers “lacks any factual detail."
UBS and Wilmington Trust declined to comment on Friday. Representatives for Nineteen77 couldn’t be reached.
Write to Becky Yerak at becky.yerak@wsj.com
