The Southern District of New York Authorizes the Rejection of Gas Gathering Agreements

In In re Sabine Oil & Gas Corporation, No. 15-11835 (SCC) (Bankr. S.D.N.Y. Mar. 8, 2016), the U.S. Bankruptcy Court for the Southern District of New York issued a bench decision granting Sabine Oil & Gas Corporation’s motion to reject three gas gathering agreements and a handling agreement that were governed by Texas law. In doing so, the bankruptcy court held that rejecting the gathering agreements was a proper exercise of Sabine’s business judgment and, in a nonbinding decision, found that the obligations arising under the gathering agreements were not covenants that ran with the land.