Zachry: Golden Pass LNG Dispute and Reorganization Plan

Zachry Holdings, Inc. and 20 subsidiaries filed chapter 11 on May 21, 2024 in the U.S. Bankruptcy Court for the Southern District of Texas (Houston Division). The company, based in San Antonio, is a construction contractor that led construction on the Golden Pass LNG export terminal in Sabine Pass, Texas. The project is owned by Qatar Energy and Exxon Mobil and was built through the CCZJV joint venture with CB&I and Chiyoda. The filing moved a large energy infrastructure dispute into chapter 11 while the project was still under construction.

The First Day Declaration describes the Golden Pass LNG contract as a fixed-price EPC arrangement with a total contract price, as amended, of just over $10 billion, with Zachry Industrial's share at about $5.8 billion. Court filings attribute the liquidity crisis to inaccurate geological studies, COVID-19, and supply-chain disruptions and state that Golden Pass issued default notices on May 8 and May 16, 2024 after beginning to direct-pay vendors in March and stopping progress payments in April. The declaration says Zachry Industrial was running $30 to $40 million of weekly expenses while receiving about $70 million per month of progress payments. The court entered an interim cash collateral order the day after filing, and the case later pivoted around a comprehensive project settlement approved in July and August 2024, which the company announced in a settlement press release and which news coverage said resolved disputes with Golden Pass and allowed construction to continue with other contractors. The bankruptcy court confirmed a chapter 11 plan on February 27, 2025, as reflected in the confirmation order, with a structure that includes a GUC trust and a 15% interest GUC note under the plan supplement and amended GUC note term sheet.

Debtor(s)	Zachry Holdings, Inc. (and 20 subsidiaries; jointly administered)
Case Number	24-90377
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Judge	Hon. Marvin P. Isgur
Petition Date	May 21, 2024
Confirmation Date	February 27, 2025
Claims Bar Date	September 16, 2024 (5:00 p.m. CT)
Governmental Bar Date	November 18, 2024 (5:00 p.m. CT)
Cash Collateral	Interim cash collateral order entered May 22, 2024
Prepetition Credit Facility	$956.25 million aggregate (revolver, term loan, letters of credit)
Project at Issue	Golden Pass LNG export terminal (Sabine Pass, Texas)

Restructuring overview

Project scope and counterparties. The Golden Pass LNG export terminal sits in Sabine Pass, Texas and is owned by Qatar Energy and Exxon Mobil. Zachry Industrial participated as the lead contractor in the CCZJV joint venture with CB&I and Chiyoda, and the project was governed by a fixed-price EPC contract. The First Day Declaration puts the total contract price, as amended, at just over $10 billion and Zachry Industrial's share at approximately $5.8 billion. The company also highlighted the scale of the contract and the role of change orders in managing adverse conditions and cost shocks, emphasizing that the fixed-price structure required Golden Pass approval to obtain change-order relief. The project backdrop is central to the chapter 11 narrative because the case was structured around exiting the project, allocating vendor liabilities, and resetting the contractor's capital structure through a confirmed plan.

Dispute drivers and liquidity stress. The First Day Declaration attributes the project disputes and liquidity stress to inaccurate geological studies, the COVID-19 pandemic, and supply-chain disruptions. The declaration also lays out the sequence of project payment disputes: Golden Pass began direct-paying vendors in March 2024, stopped progress payments in April, and issued default notices on May 8 and May 16. The filing states that, at the time progress payments stopped, Zachry Industrial was incurring about $30 to $40 million per week in expenses while receiving around $70 million per month in progress payments. The same filing describes Golden Pass clawing back funds from advance progress payments and highlights the pressure this created on project liquidity. The debtor framed those dynamics as the immediate driver of its chapter 11 filing and the reason it needed court protection to restructure and unwind the project relationship.

Capital structure at filing. The First Day Declaration describes a senior secured credit facility governed by a credit agreement providing for borrowings and letters of credit in an aggregate principal amount of $956.25 million, with Bank of America, N.A. as administrative agent, swing line lender, and letter of credit issuer. The filing states that, as of the petition date, the debtors had approximately $125.0 million of revolving loans outstanding, $156.25 million of term loans outstanding, and approximately $618.9 million in undrawn letters of credit under the credit agreement. It also identifies a separate $5.0 million letter of credit related to a legacy workers' compensation program that was fully cash collateralized and outside the main credit agreement. The declaration further states that the secured parties held first-priority liens on substantially all debtor assets and that the debtors entered into a continuing guaranty in connection with the credit facility.

Cash collateral instead of DIP financing. The case proceeded on cash collateral at the outset rather than a debtor-in-possession financing facility. The interim cash collateral order authorized the debtors to use cash collateral subject to a rolling 13-week budget and periodic variance reporting. The order required a variance report beginning June 28, 2024 that compared actual cash receipts and disbursements to the approved budget for a four-week test period. It set variance tests that receipts could not fall more than 20% below budget and operating disbursements could not exceed budget by more than 20%, with limited offsetting of variances and the exclusion of restructuring professional fees and restructuring charges from the disbursement variance test. The order also granted adequate protection liens described as first-priority senior liens subject to the carve-out and permitted prior liens and included a waiver of section 552(b) equities of the case limitations and a no-surcharge provision under section 506(c), subject to the carve-out and a final order. These mechanics placed weekly liquidity reporting and budget discipline at the center of early case management.

GPX settlement and project unwind. The debtors, Golden Pass, CB&I, Chiyoda, and the joint venture entity pursued a settlement to unwind the Golden Pass project relationship and allocate responsibility for project vendor claims, letter-of-credit exposure, and demobilization. The court approved the settlement on an interim basis in July 2024 and entered a final order on August 12, 2024. In public statements, the company said the settlement allowed it to exit the project and move the chapter 11 case forward, and news coverage reported that the agreement resolved disputes with Golden Pass and allowed construction to continue. The final settlement order authorizes Golden Pass to pay valid unpaid obligations of Zachry Industrial to vendors and subcontractors related to the project, and it requires Golden Pass to reimburse the debtors for certain sales taxes paid on project claims in a manner tied to a direct payment cap described in the settlement documents.

The final settlement order also approved rejection of the EPC contract and the hybrid joint venture agreement under section 365 while making clear that rejection did not modify certain insurance coverage entitlements, terminate the contracts, or create rejection damages against the estates. The order authorized Golden Pass to make scheduled draws under a standby letter of credit associated with the project and directed the issuer to reduce availability and related guarantee exposure after an excess claims amount is determined. It further required transfer of project-site equipment to Golden Pass free and clear of liens on an as-is, where-is basis and dismissed an adversary proceeding with prejudice to implement the releases in the settlement. These provisions effectively transferred operational responsibility for the project to Golden Pass and reduced litigation risk for the estates.

Claims administration and bar dates. The court entered a comprehensive bar date order that set September 16, 2024 at 5:00 p.m. Central Time as the general claims bar date for non-governmental claims and November 18, 2024 at 5:00 p.m. Central Time as the governmental bar date for governmental units. The order also provides that claims arising from rejection of executory contracts or unexpired leases are due by the later of the applicable bar date and 30 days after entry of the order approving the rejection. If the debtors amend schedules after notice of the bar dates, the order provides a separate amended schedules bar date that is the later of the applicable bar date and 30 days after the notice of amendment is mailed. These deadlines define the schedule for non-governmental creditors, governmental units, and rejection damages claimants to preserve rights in the case.

The bar date order also details who must file proofs of claim to participate in distributions. It requires parties whose claims are not scheduled, are scheduled as disputed, contingent, or unliquidated, or are scheduled in the wrong amount or classification to file proofs of claim by the applicable bar date. The order also requires parties asserting section 503(b)(9) claims to file a proof of claim by the bar date, even though those claims are priority administrative expense claims. By contrast, the order states that certain categories are not required to file proofs of claim, including the U.S. Trustee for fee claims, parties whose claims are scheduled as undisputed, noncontingent, and liquidated and who agree with the scheduled amount, and entities whose claims have been allowed by a final order. It further excludes debtors and non-debtor affiliates, parties with claims solely against non-debtor affiliates, and entities whose claims have already been paid in full pursuant to a court order. These categories shape how the claims register is built and which parties need to take affirmative steps to preserve prepetition rights.

The debtors also sought authority to retain a claims and noticing agent early in the case. The claims and noticing agent application identifies Kurtzman Carson Consultants LLC (KCC) as the claims, noticing, and solicitation agent and authorizes the firm to maintain the official claims register and serve as the repository for proofs of claim. The order implementing that request also directs KCC to provide an electronic interface and a mailing address for submissions, which ties the bar date deadlines to a formal claims processing system rather than ad hoc submissions to the court.

Plan confirmation and class treatment. The court entered the confirmation order on February 27, 2025, confirming the amended chapter 11 plan filed on February 23, 2025. The disclosure statement for the modified plan includes a projected recovery table that estimates recoveries by class, subject to the usual qualification that actual outcomes depend on allowed claim amounts and other conditions. The disclosure statement projects 100% recoveries for other secured, other priority, prepetition credit facility, deferred compensation, convenience, and general unsecured claims, with equity interests reinstated. The class treatment also contemplates an amended and restated credit facility for the prepetition secured lenders and a GUC trust structure for general unsecured claims.

Effective date mechanics and plan supplement. The amended plan defines the effective date as the first business day after the confirmation date on which no stay is in effect and all conditions precedent to effectiveness have been satisfied or waived. That definition means the legal confirmation date does not necessarily coincide with the operational go-live of the plan. The confirmation order notes that the plan supplement filed on February 5, 2025 included the GUC Trust Agreement and GUC trust note term sheet, and that an amended term sheet was filed on February 11, 2025. Taken together, those documents define the mechanics for transferring assets into the trust, issuing the GUC note, and implementing the distributions that underpin the projected 100% recoveries for general unsecured claims.

GUC trust and GUC note economics. The plan supplement filed on February 5, 2025 includes the GUC Trust Agreement and a GUC Trust Note term sheet, and the amended GUC note term sheet filed on February 11, 2025 updates the economic terms. The trust agreement provides that, on the effective date, GUC trust assets vest in the trust free and clear and that the trust is intended to be treated as a liquidating trust and grantor trust for U.S. federal income tax purposes. It also requires distributions of net income or net proceeds at least annually, permits reserves for disputed claims, and limits distributions on disputed claims until they are allowed. The amended GUC note term sheet provides for an initial principal amount equal to the aggregate of allowed general unsecured claims, including postpetition interest at the federal judgment rate, and sets a 15% per annum interest rate split between a 7.5% cash component and a 7.5% PIK component, with quarterly cash interest payments and quarterly capitalization of PIK.

The GUC Trust Agreement also frames the trust as a vehicle intended to liquidate assets rather than operate a going-concern business, with limits on the trust engaging in trade or business activities other than those needed to wind down. It provides that distributions can be made only after reserving amounts for disputed claims and that beneficiaries cannot receive distributions exceeding the allowed amount of their claims plus their share of accrued interest on the GUC trust note. The agreement also allows removal of the trustee by requisite GUC trust beneficiaries, underscoring that the trust is governed by creditor constituencies rather than by the reorganized debtors. These mechanics place the trust at the center of general unsecured recoveries and align its payout mechanics with the GUC note economics.

Exit credit facility and intercreditor structure. The amended plan defines the A&R credit facility as the prepetition credit facility amended and restated under the plan and defines the exit intercreditor agreement as a junior lien intercreditor agreement among the A&R credit facility agent, Sunbelt (as lender under the Sunbelt promissory note), and the GUC note collateral agent. These definitions provide the structure for how lien priorities and collateral rights are allocated among the secured credit facility, Sunbelt debt, and the GUC note collateral package.

GPX claims treatment under the plan. The amended plan treats GPX-related claims by tying them to the settlement documents. It provides that GPX claims not satisfied before the effective date are paid by Golden Pass under the settlement documents and states that, in the event of any inconsistency between the plan and the GPX settlement documents, the settlement documents control. This aligns plan implementation with the settlement order and avoids double payment or inconsistent treatment of project claims.

Release and opt-out mechanics. The confirmation order includes findings that the debtors provided notice and a mechanism to opt out of third-party releases, including notice documents that attached opt-out forms. The order also states that non-creditor employees were excluded from third-party releases and includes findings on the adequacy of notice for release, exculpation, and injunction provisions under Bankruptcy Rule 3016(c). These findings frame the scope of the releases and the process used to solicit creditor consent.

Key milestones. Local reporting summarized the case timeline and confirmation date in early 2025, while court filings provide the underlying procedural dates. The table below consolidates the core docket milestones with key project and case events covered in local coverage.

Frequently Asked Questions

What is Zachry Holdings and what business does it run?

Zachry Holdings, Inc. is a San Antonio-based construction contractor that led construction on the Golden Pass LNG export terminal in Sabine Pass, Texas. The project is owned by Qatar Energy and Exxon Mobil and was built through the CCZJV joint venture with CB&I and Chiyoda, with Zachry Industrial serving as the lead contractor.

Why did Zachry file chapter 11?

The First Day Declaration attributes the filing to project disputes and liquidity stress tied to the Golden Pass LNG contract. The declaration cites inaccurate geological studies, COVID-19, and supply-chain disruptions, and says Golden Pass began direct-paying vendors in March 2024, stopped progress payments in April, and issued default notices on May 8 and May 16, 2024. The filing states that Zachry Industrial was incurring $30 to $40 million in weekly expenses while receiving about $70 million per month in progress payments.

When did Zachry file and where is the bankruptcy case pending?

Zachry Holdings, Inc. and 20 subsidiaries filed chapter 11 on May 21, 2024 in the U.S. Bankruptcy Court for the Southern District of Texas (Houston Division). The company announced the filing in a press release.

Did the company obtain DIP financing?

No. The court entered an interim cash collateral order authorizing use of cash collateral under a rolling 13-week budget with variance tests. The order also provided adequate protection liens and limited waivers of sections 552(b) and 506(c), subject to the carve-out and a final order.

What were the key claims bar dates?

The bar date order set September 16, 2024 at 5:00 p.m. Central Time as the general claims bar date and November 18, 2024 at 5:00 p.m. Central Time as the governmental bar date. The order also provides a rejection damages bar date that is the later of the applicable bar date and 30 days after entry of the rejection order, and an amended schedules bar date that is the later of the applicable bar date and 30 days after notice of an amended schedule is mailed.

What did the GPX settlement approve?

The final settlement order approved the settlement between the debtors, Golden Pass, CB&I, Chiyoda, and the joint venture entity. Key terms included Golden Pass paying valid unpaid vendor and subcontractor obligations, authorizing scheduled draws under a standby letter of credit, approving rejection of the EPC contract and hybrid joint venture agreement, transferring project-site equipment, and dismissing an adversary proceeding with prejudice. The company said in a settlement press release that the settlement allowed it to exit the project, and news coverage described the agreement as resolving disputes and allowing construction to continue.

How does the plan treat general unsecured claims?

The disclosure statement projects a 100% recovery for general unsecured claims through a GUC trust and a GUC note. The plan supplement and amended GUC note term sheet describe the trust structure and the note terms, including a 15% interest rate split between 7.5% cash and 7.5% PIK components.

What happened to equity under the plan?

The disclosure statement projects that Zachry equity interests are reinstated under the confirmed plan, reflecting the plan's projected full recovery for general unsecured claims and the structure of the amended and restated credit facility for secured lenders.

Who is the claims agent for Zachry?

Kurtzman Carson Consultants LLC (KCC) serves as the claims and noticing agent. The firm maintains the official claims register and serves as the authorized repository for proofs of claim. The appointment is described in the claims and noticing agent application.

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