Toklan Oil and Gas files for Chapter 11 protection
BY ROD WALTON World Staff Writer
Wednesday, July 25, 2012
7/25/12 at 2:42 AM
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A California bank failure and real estate development gone bad started a domino effect that has sent a 52-year-old Tulsa energy company into Chapter 11 bankruptcy protection.
Tulsa-based Toklan Oil & Gas Corp. is the victim of West Coast banking and real estate collapse dating back to 2008, according to Toklan's attorney for the Chapter 11 case filed this month in Tulsa federal court.
Toklan is headed by Pat Cobb, company president and a well-known figure in the Oklahoma energy sector.
"This bankruptcy had nothing to do with Pat Cobb's ability in the oil and gas business," Tulsa attorney Neal Tomlins said Tuesday. "His family has been successful in the business for decades."
Instead, Cobb's company was brought down due to its connection with PHR LLC and Oresund Capital, which held interests in Northgate Crossing LLC, heading up a planned residential and commercial development in the Coachella Valley area of southeastern California, Tomlins said. Toklan owned interest in and Cobb was a managing member of PHR, which in turn had a 50 percent stake in Northgate Crossing, according to records.
La Jolla Bank FSB provided financing for the Northgate project, but the bank failed in early 2010. OneWest Bank bought La Jolla's assets, which included Toklan's $26.27 million guarantee of debt related to the project.
"OneWest refused to fund the remaining obligations for Northgate, which ultimately caused Northgate to file bankruptcy in California," said a court motion asking a judge to let Toklan use cash collateral to stay in operation during Chapter 11. "Debtor had guaranteed repayment of the debt owed to La Jolla Bank," the filing states.
On April 6, a California judge ordered the debtor to pay the $26.27 million guarantee. One month later, Toklan sold a majority of its oil properties for $5.6 million, but it held on to its natural gas assets, Tomlins said.
Toklan also owes Bank of Oklahoma about $20 million, according to court records.
Tulsa-based oil and gas company NBI Services Inc. has emerged as a stalking-horse bidder to buy Toklan once it emerges from Chapter 11 bankruptcy. The purchase amount was listed at $6.078 million in court records.
Toklan Oil & Gas was started as Duncan Corp. in October 1960 and also was named Cobb Oil and Gas Co. before its current name. The Cobb family owns the company, which employs 10 people and generated $7.7 million in revenue last year from its wells and properties, which are mainly in Oklahoma and Texas.
The NBI purchase would include Toklan subsidiaries such as Sand Springs Oil and Gas and TOG/TM 21 Centre LLC, owner of an office building at 2642 E. 21st St., where Toklan is based.
Tomlins said he doesn't think the Cobb family will disappear from the Tulsa oil and gas scene. Pat Cobb also serves as vice chairman of the Oklahoma Independent Petroleum Association's executive committee.
"They've been in the oil and gas business for decades and I would anticipate they would continue in some way," the attorney said.
Cobb was traveling Tuesday and unavailable for comment.
OneWest Bank was formed in 2009 when investment group IMB HoldCo. LLC bought assets of Independent National Mortgage Corp., known as IndyMac. Federal banking regulators seized IndyMac's asset after the mortgage loan meltdown.
OneWest's investors included computer billionaire Michael Dell, financier George Soros and private equity investor J. Christopher Flowers.
Toklan Oil and Gas Corp. timeline
1960: Company formed as Duncan Corp.
2003: PHR LLC, headed by Toklan President Patrick Cobb, formed as Tulsa-based investment firm. PHR eventually takes 50 percent stake in California real estate project called Northgate Crossing.
2008: Planners announce Northgate Crossing, a mixed-use residential and commercial development in Coachella Valley near Indio, Calif.
2009: OneWest Bank begins operations after investment group buys assets of failed Independent National Mortgage Corp., or IndyMac.
2010: La Jolla Bank, financier of Northgate, fails and is acquired by OneWest Bank.
May 2011: Northgate Crossing LLC files for Chapter 11 bankruptcy protection in California.
April 2012: California judge orders Toklan-PHR to pay $26.27 million for its guarantee of La Jolla's Northgate debt.
May: Toklan sells majority of oil assets for $5.6 million.
July 13: Toklan Oil and Gas files for Chapter 11 bankruptcy in Tulsa federal court.
Original Print Headline: California ties topple Tulsa oil company
Rod Walton 918-581-8457