Park County may have to give back nearly $1 million and could lose more than $2.1 million in expected tax revenues if a Texas oil and gas company has its way in court.

Vanguard Natural Resources of Houston has filed a claim in bankruptcy court that if granted would require the county to pay back $879,873.80 in already paid property taxes from 2017, along with additional interest and legal costs. More than $1.2 million is still owed to the county in the second-half of a payment installment never paid by Vanguard. 

Vanguard filed for Chapter 11 bankruptcy in February 2017 after incurring $1.8 billion in debt. By fall 2017 it had cleared a significant portion of this total and paid its taxes from 2016 business that November. The publicly traded company is still running business operations today and already paid the county for 2017 operations. 

A recent Philadelphia Inquirer article reported the company appears to have made 14.1 percent in partnership profits in 2018. 

Vanguard is arguing, even though the taxes were paid out after the bankruptcy, that Park and six other Wyoming counties the company has sued had to have filed a “proofs of claim” in bankruptcy court by July 2017 in order to have any entitlement to the money.

“Under the terms of the [bankruptcy] plan, unfilled claims are discharged,” Vanguard attorney James Grogan, of Philadelphia-based law firm Blank Rome wrote in the original complaint. “The plan enjoins claimants from taking actions to collect on any discharged claims.”

Park, Sweetwater, Natrona, Campbell, Johnson and Carbon counties are being represented by Bryan Cave Leighton Paisner LLP of Dallas.

Poley said the counties hired a Texas law firm to handle the case in order to ease communications with the Texas company it is engaging in U.S. Bankruptcy Court for the Southern District of Texas. She said since the case opened about 10 months ago, Park has spent about $10,000 on legal fees.

“It’s a necessary evil,” said county commissioner Jake Fulkerson. “We’re all getting pinched in money. This is real dollars we’re talking about.”

Vanguard is also suing the Wyoming Department of Revenue for a more than $700,000 refund on its 2014 state severance taxes and filed a separate claim for $2.49 million in tax refunds from Sublette County. 

“The … debtor has failed to plead a claim … that is viable or with the requisite,” wrote Keith Aurzada, a partner with Bryan Cave, “and has otherwise failed to provide more than labels, conclusions and a formulaic recitation of the elements for its causes.”

Vanguard operates facilities north of Powell and south of Meeteetse, which include a natural gas processing plant, pipelines and gas wells.

“A [tax] transfer is only avoidable … if the property was part of the bankruptcy estate when the transfer was made,” Aurzada wrote in a motion to dismiss.“Once a [bankruptcy] petition is filed, all property that used to be that used to be the debtor’s property becomes property of the estate.”

In August 2018 the company filed for a refund, citing a clerical error as to why it paid the nearly $1 million sum, according to Park County Treasurer Barbara Poley. Grogan said in court documents county officials used poor judgement and “should have known” to not accept Vanguard’s taxes.

“If the court does not rule in favor of plaintiff on account of the other causes of action set forth herein, there will be no remedy provided by law,” Grogan said, “Equity and good conscience, therefore, require [the] defendant to disgorge its ill-gotten gains.” 

The tax revenues are to be disbursed to 12 different tax benefactors including Powell and Meeteetse schools, and Northwest College. Poley said the K-12 schools would be reimbursed for any losses but Northwest College President Stefani Hicswa said the school would be forced to pull money from its own reserves in order to compensate for the deficit.

In April Vanguard again filed for Chapter 11 bankruptcy protection and expects to be able to continue business as usual.

Poley said she does expect the case to be resolved for at least one year.

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