Tex-Gas Chapter 11 Litigation
Tex-Gas Holdings, LLC is the owner of a single-tenant industrial complex comprising approximately 47,000 square feet situated on 17.16 acres at 1950 FM 3057 in Bay City, Matagorda County, Texas. The facility houses a devulcanization plant operated by an affiliated tenant, part of a broader rubber recycling and industrial operations platform. In its First Amended Chapter 11 Plan, Tex-Gas outlined a restructuring predicated on stabilizing operations and preserving the value of this core industrial asset while resolving complex lien and claim disputes that threatened the company’s reorganization.
At the heart of the case was a wrongful foreclosure attempt by certain creditors premised on an asserted lien against Tex-Gas’s property. After a third party failed to fund a purported $30 million revolving credit facility, creditors sought to leverage a deed of trust to foreclose non-judicially on Tex-Gas’s Bay City property. The Firm immediately moved to protect the company and commenced adversary proceedings, challenging the validity and enforceability of the claimed lien and defending against expansive creditor claims.
Following expedited discovery and trial, Andrews Myers secured a comprehensive litigation victory for Tex-Gas against Lui So Yuk, Sham Wai Bun, and Fortune Insight Limited. The bankruptcy court ruled that the recorded deed of trust was not an enforceable lien interest against Tex-Gas’s property and ordered that it be extinguished. The court’s judgment eliminated the cloud on title, safeguarded Tex-Gas’s principal asset from foreclosure, and cleared the path for plan confirmation. Earlier in the case, the Firm also obtained a default judgment against Fortune Insight Limited, reinforcing the conclusion that the lien asserted through Fortune Insight’s documents could not stand.
The Firm further achieved a significant narrowing of creditor exposure. Although Yuk and Bun initially filed large, secured proofs of claim, the court disallowed the secured status and allowed only limited unsecured claims—$400,980 for Yuk and $267,320 for Bun—representing a material reduction from the tens of millions of amounts asserted.
Andrews Myers paired targeted litigation strategy with disciplined case management to secure rapid, decisive relief. The Firm’s approach integrated lien-avoidance and declaratory remedies, objections to claims, and plan strategy to deliver a cohesive result: extinguishment of the Fortune Insight lien, substantial reduction of creditor claims, and confirmation of a plan that preserved the enterprise and protected the value of Tex-Gas’s Bay City industrial facility. The case showcases the Firm’s ability to contain litigation risk, neutralize wrongful foreclosure attempts, and drive favorable outcomes in high-stakes, cross-border financing disputes within Chapter 11.
