If an upstream (drilling) company with a long-term pipeline contract files for bankruptcy, does that give the company the right to break its pipeline contract? A major shipper on the Rockies Express (REX) pipeline, Ultra Resources, filed for bankruptcy with the express plan to skip out on its obligations to REX (see REX Pipe Asks FERC to Prevent Shipper from Breaking Contract). The Federal Energy Regulatory Commission (FERC) stepped in to say it (FERC) has jurisdiction to decide whether or not Ultra (and by extension, other companies) can wiggle out of their contracts via bankruptcy. The U.S. Court of Appeals for the Fifth Circuit recently ruled that FERC does not have the lead in such cases–that a decision about breaking a pipeline contract will be up to the bankruptcy court instead. This is bad news for pipeline builders.
If an upstream (drilling) company with a long-term pipeline contract files for bankruptcy, does that give the company the right to break its pipeline contract? A major shipper on the Rockies Express (REX) pipeline, Ultra Resources, filed for bankruptcy with the express plan to skip out on its obligations to REX (see 