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The U.S. Trustee is pressing to dismiss KP Engineering’s post-confirmation Chapter 11 case after the reorganized debtors missed post-confirmation reports for Q4 2022, all of 2023 and 2024, and Q1 2025, and allegedly owed about $245,368.63 in statutory fees under 28 U.S.C. § 1930 U.S. Trustee dismissal motion. The fight matters because dismissal would end the still-open bankruptcy case while related litigation against Brandon T. Steele and others remains active.
At the August 7 hearing, the court heard status reports on the dismissal motion and set a follow-up hearing for August 21 at 1:00 p.m. in Houston courtroom minutes. The same day, the court ordered Steele to appear personally to testify about material noncompliance in the main case and discovery failures in Adv. No. 19-03707; if he does not appear without prior court approval, the court said it will direct the U.S. Marshals to bring him in and assess sanctions Steele appearance order.
The court confirmed KP Engineering, LP and KP Engineering, LLC’s third amended joint Chapter 11 plan on June 12, 2020, less than ten months after the EPC contractor filed in the Southern District of Texas on August 23, 2019. The cases began with KP Engineering operating out of Tyler, Texas, with KP Engineering, LLC as general partner, BTS Enterprises holding 99% of the LP equity, and Brandon T. Steele signing the petition as president source filing. The filing followed losses and payment disputes on Targa Pipeline projects, including Targa’s August 3, 2019 termination of the Johnson Plant contract, a $2.5 million Hancock Mechanical claim, and additional subcontractor litigation source filing.
At filing, Texas Capital Bank held an $8.7 million secured claim against substantially all assets, while BTS supported a proposed $4 million priming DIP facility with $750,000 available on interim approval and $3.25 million on final approval. The debtor reported 57 full-time employees, roughly $350,000 in biweekly payroll, and about $375,700 of prepetition workforce obligations source filing. The confirmed plan created the KP Engineering Liquidation Trust, appointed Michael D. Warner as liquidation trustee, bound creditors and contract counterparties, retained estate causes of action, preserved Targa-related setoff/recoupment rights, and left Texas Capital’s secured and DIP claims undisputed while approving exit financing mechanics source filing.
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