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In re Wilson

United States Bankruptcy Court for the Northern District of Texas, Lubbock Division

February 13, 1987, Decided 1 

No. 584-50146 Chapter 11, Adversary No. 584-5117



Procedural History

On June 21, 1984, William B. Wilson, a/k/a Willie B. Wilson, Individually and d/b/a Wilson Ranches, filed for protection under Chapter 11 of the Bankruptcy Code. On November 14, 1985, Mr. Wilson, as Debtor-in-Possession (Wilson), brought this adversary proceeding against TXO Production Corp. (TXO), seeking an accounting and turnover of income withheld by TXO as operator of oil and gas leases in which Wilson owns interests. Wilson asserted such withholding is a preferential transfer pursuant to 11 U.S.C. § 549 or, in the alternative, a fraudulent transfer pursuant to 11 U.S.C. § 548. He sought to recover not only transfers made to TXO within 90 days of the filing of the bankruptcy petition but, characterizing TXO as an insider, also transfers which occurred within one year of the filing of the petition as well as postpetition funds withheld.

TXO responded  [**2]  that the funds it held were cash collateral of its operator's lien on the Debtor's interests in the wells operated by TXO. TXO asserted that it had the right to withhold the funds and that such withholding did not constitute transfers, either preferential or fraudulent, from the Debtor.

Subsequently, TXO filed a Motion for Relief from Automatic Stay to allow it to foreclose its operator's lien against the various interests of Wilson in certain oil and gas wells, on the grounds that Wilson had neither paid his expenses on the wells nor paid adequate protection. Hearing was held to the Court on June 4, 1986, at which time TXO argued that the various operating agreements between TXO and Wilson constituted executory contracts which Wilson had neither assumed nor rejected.

 [*962] Facts

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69 B.R. 960 *; 1987 Bankr. LEXIS 155 **; 1 Tex. Bankr. Ct. Rep. 257

In re William B. WILSON a/k/a Willie B. Wilson Individually and d/b/a Wilson Ranches, Debtor, William B. WILSON, Plaintiff, v. TXO PRODUCTION CORP., Defendant


working interest, royalty, operating agreement, co-tenant, executory contract, oil, non-operators, postpetition, prepetition, oil and gas, rights, operating expenses, recording, expenses, Debtor-in-Possession, proceeds, setoff, asserts, notice, funds, collateral, bankruptcy petition, no writ, obligations, default, parties, cure