BP Energy Company has filed a lawsuit in the Texas business courts accusing Dallas oilman Brad Cox of breaching a $270 million guaranty agreement related to a loan given to MLCJR LLC, a business owned by Cox.
It is one of less than a dozen cases filed in the business courts since they opened Sept. 1 and is by far seeking more damages than any of the other cases filed in those courts. Judges Andrea Bouressa and William “Bill” Whitehill are the judges presiding over the First Business Court Division, where this lawsuit was filed.
“Simply put, the guaranty agreement, in clear and unambiguous terms, obligates defendant to fully cover the contractual payment obligations and provides that, in the event that MLCJR breached its payment obligations, the defendant has an absolute and irrevocable duty to make BPEC whole,” BP alleges in the suit. “The clear intent of the parties, expressed in the agreements’ text, was to establish the most unambiguous, undisputable, and unavoidable guaranty obligation possible in favor of BPEC.”
According to the lawsuit, in April 2016, MLCJR entered a loan agreement for $65 million with Amarillo National Bank. BP alleges that to get the bank to agree to the loan, Cox and some of his Cox Oil affiliated businesses entered into a guaranty agreement to “irrevocably and unconditionally guarantee the obligation.”
Cox also agreed that, in the event of a default, Amarillo National Bank could seize mortgaged property “including but not limited to land, wells, hydrocarbons, and minerals extracted from the earth,” according to the lawsuit, and offered the “personal properties and fixtures of Cox Oil Offshore and MLCJR” as collateral.
Between April 2016 and July 2022, the loan agreement was amended 12 times, extending the line of credit eventually to $80 million.
“Defendant signed a broad, unlimited and continuing guaranty in connection with the original agreement that expressly included amendments,” BP alleges. “Defendant is a sophisticated party who was represented by counsel in connection with the negotiation, finalization, and execution of the guaranty agreements.”
In October 2018, Amarillo National Bank and BP entered an “intercreditor agreement” that gave BP the right to enforce the guaranty as a creditor against Cox. In December 2021, that agreement was amended and entered into by Cox, the bank and BP, according to the lawsuit. In another agreement, dated June 13, 2024, Amarillo National Bank assigned any rights under the guaranty agreements to BP.
That same month, the amount Cox owed to BP was about $270.2 million, plus accrued and unpaid interest. After Cox failed to pay, BP sent a demand letter on June 20, according to the lawsuit.
“Defendant has refused to even respond to BPEC’s written demand for payment and has not provided the required guaranty balance payment,” BP alleges.
The lawsuit notes that in May 2023, MLCJR and Cox Oil filed for Chapter 11 bankruptcy protection in the Southern District of Texas, and BP alleges that under the agreements, it has the right to enforce payment of the guaranty balance “as a Creditor pursuant to the Intercreditor Agreement between ANB and BPEC.”
That bankruptcy proceeding is one in which former judge David Jones served as mediator and the Jackson Walker law firm represents the debtor, MLCJR.
The U.S. Trustee is attempting to claw back millions in fees awarded to the Dallas-based firm in several bankruptcy cases presided over by former judge David Jones, who resigned from the bench in October when it came to light he had a secret romantic relationship with bankruptcy lawyer Elizabeth Freeman, who was a partner at Jackson Walker but was asked to leave the partnership after confessing to the firm in 2021 that the relationship existed.
BP is represented by Kenneth E. Broughton and Efrain Vera of Reed Smith.
Counsel for Cox had not filed an appearance as of Wednesday.
The case number is 24-BC01A-0002.