Amid a heated Chapter 11 battle, Diamondback Energy Inc. (FANG) has submitted a $675 million unsolicited stalking-horse bid for the Midland Basin assets of bankrupt oil and gas producer Breitburn Energy Partners LP. 

On Sept. 29, the official committee of unsecured creditors filed an objection to the debtor's fifth motion for an exclusivity extension with the U.S. Bankruptcy Court for the Southern District of New York. The court filing indicated Diamondback made an offer on Aug. 29 for Breitburn's Permian Basin holdings, while two unidentified parties have submitted bids for other assets, with the unsolicited offers collectively covering the majority of the debtor's assets.

"The debtors have now been in bankruptcy for more than sixteen months, and there is still no plan on file," wrote the committee, which represents the interests of unsecured creditors. "Despite four extensions of the debtors' exclusive periods and months of negotiations between the debtors, unsecured creditors, and to a certain extent [a group of holders of 9.25% second-lien notes], there has been no agreement on a plan that clearly maximizes the value of the estate and is supported by each class of creditors."

Judge Stuart M. Bernstein is set to consider the exclusivity motion on Oct. 12. Breitburn looks to maintain the exclusive right to file a Chapter 11 plan through Oct. 30 and to solicit votes through Dec. 27. Exclusivity was set to expire Sept. 28 before the Los Angeles independent oil and gas production company filed the extension motion a day earlier.

If Breitburn failed to extend exclusivity, other parties including the creditors' committee could submit proposals to guide the company out of Chapter 11.

Counsel to the committee, led by Gregory A. Bray of Milbank, Tweed, Hadley & McCloy LLP, argued in the objection that the two plans offered thus far by Breitburn were focused on selling assets, which it agrees is appropriate, but the creditors felt neither plan under consideration by the debtors would maximize the value of the assets for unsecured creditors.

"Accordingly, the committee believes the best course of action would be to terminate exclusivity and allow the committee to propose a plan based on a transparent sale process employing well-established procedures that will maximize value," the committee wrote.

Also included in the filing is testimony from the committee's financial adviser, Houlihan Lokey Inc. managing director Brett Lowrey, who argued that a competitive sale process for Breitburn's assets could bring in proceeds far greater than the current bids.

"As the current bids are simply starting 'floors,' the eventual sale proceeds could be higher than what has already been offered," Lowrey wrote. "Selling the debtors' assets could be effectuated in an efficient manner, thus avoiding any unnecessary delay and expense associated with any proposed plan. The pursuit of asset sales should maximize the value for creditors, especially the particularly susceptible fulcrum class."

According to Breitburn's website, the company has drilled 3,186 wells across 124,988 gross acres in the Midland Basin, a subformation of the prolific Permian Basin in west Texas and New Mexico.

An offer letter signed by Diamondback Energy CEO Travis Stice included in the filing shows the potential suitor has offered to acquire the Midland Basin assets through a Section 363 sale process -- rather than under a plan -- with a good-faith deposit of 5% of the cash purchase price and a 2% breakup fee if the debtor withdrew from the deal for any reason other than a Diamondback default.

Diamondback's offer assumes Breitburn's Permian Basin holdings consist of 17,502 net acres with current production of 5,500 barrels of oil equivalent per day. The offer comes in at $30,000 per undeveloped acre, according to analyst Gabriele Sorbara of Williams Capital Group LP.

Meanwhile, the filing also said a "reputable third party" made a $211 million unsolicited bid for Breitburn's California oil and gas properties on Sept. 5. Breitburn has interests in 567 productive wells in California and operates 100% of those wells, according to its website.

Another "reputable third party" on Sept. 19 made an unsolicited offer to purchase the company's Michigan Antrim Shale natural gas assets, which do not include its Michigan oil producing assets or its natural gas assets in Kentucky and Indiana, for between $63.5 million and $70 million, the filing shows. The bidder said it could not compete in a bidding process, unlike the other two parties, but the committee said the offer "is indicative of the significant third-party interest in the debtors' assets."

With a default looming, Breitburn filed for Chapter 11 on May 15, 2016, to restructure $3 billion in outstanding funded debt.

A Diamondback Energy official did not respond to a request for comment outside of regular business hours. Debtor counsel Stephen Karotkin and Ray Schrock of Weil, Gotshal & Manges LLP could not be reached for comment.

More of What's Trending on TheStreet:

More from Bankruptcy

Who Could Win Big Now That Toys 'R' Us Is a Relic of the Past?

Who Could Win Big Now That Toys 'R' Us Is a Relic of the Past?

Billionaire Real Estate Mogul Sam Zell: 'I'm a Bridge Guy, Not a Wall Guy'

Billionaire Real Estate Mogul Sam Zell: 'I'm a Bridge Guy, Not a Wall Guy'

'Worn Out' Shoemakers Still Have a Chance to Heal

'Worn Out' Shoemakers Still Have a Chance to Heal

Bank of America to Loan $43.2 Million to Arms Maker Remington

Bank of America to Loan $43.2 Million to Arms Maker Remington

Credit Rating Agencies Cast Doubt on P.F. Chang's Outlook

Credit Rating Agencies Cast Doubt on P.F. Chang's Outlook