United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED August 11, 2022 No. 21-30668 Lyle W. Cayce Clerk

In the Matter of Falcon V, L.L.C.,

Debtor,

Argonaut Insurance Company,

Appellant,

versus

Falcon V, L.L.C.,

Appellee.

Appeal from the United States District Court for the Middle District of Louisiana USDC No. 3:20-CV-702

Before Higginbotham, Higginson, and Oldham, Circuit Judges. Stephen A. Higginson, Circuit Judge: This appeal arises out of the bankruptcy of Falcon V, LLC and its affiliates. After the bankruptcy court confirmed Falcon V’s reorganization plan, Argonaut Insurance Company asked the court to interpret the plan, arguing primarily that a $10.5 million suretyship agreement was an “executory contract” and that the reorganized Falcon V had therefore Case: 21-30668 Document: 00516429246 Page: 2 Date Filed: 08/11/2022

No. 21-30668

assumed the agreement under the reorganization plan’s express terms. The bankruptcy court concluded that Falcon V had not assumed the agreement and disallowed Argonaut’s $7.3 million unsecured claim against Falcon V. The district court affirmed the judgment of the bankruptcy court. We AFFIRM. I. The relevant facts are uncontested. Appellee Falcon V, LLC and its affiliates ORX Resources, LLC and Falcon V Holdings, LLC (collectively “Falcon V”) engage in oil and gas exploration and development. Appellant Argonaut Insurance Company (“Argonaut”) provides surety bonds. 1 Falcon V and Argonaut entered into an arrangement that the parties refer to as the “Surety Bond Program.” Under the Surety Bond Program, Argonaut posted four irrevocable performance bonds (the “Bonds”) guaranteeing Falcon V’s obligations to various third-party obligees. These obligations related primarily to the plugging, abandonment, and restoration of oil and gas wells. The largest bond was in favor of Hilcorp Energy I LP, in the amount of $10,000,000. The other three bonds were in favor of Chevron Corporation, the Louisiana Office of Conservation, and the United States, in the amounts of $300,000, $250,000, and $25,000, respectively. The Bonds provide that if Falcon V fails to perform its obligations, Argonaut must either pay the obligee an amount equal to the obligation or perform the obligation itself, up to the amount of the bond. The Bonds further provide that “regardless of the payment or nonpayment by [Falcon V] of any premiums owing with respect to this Bond, [Argonaut’s] obligations under this Bond are continuing obligations and shall not be affected or discharged by any failure by [Falcon

1 “A surety bond creates a three-party relationship, in which the surety becomes liable for the principal’s debt or duty to the third party obligee.” Ins. Co. of the W. v. United States, 243 F.3d 1367, 1370 (Fed. Cir. 2001).

2 Case: 21-30668 Document: 00516429246 Page: 3 Date Filed: 08/11/2022