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Articles Tagged with Bankruptcy

Rising oil prices apparently are not enough to save the once-promising master limited partnership (“MLP”) Seadrill Limited.  Seadrill stock plummeted, going down 54% on April 4, 2017 as the company announced that it will likely file for bankruptcy.

The most ominous news from Seadrill was its warning to investors of its substantial debt load and its expectation that shareholders are “likely to receive minimal recovery for their existing shares.”

Seadrill, as many oil and gas companies, has seen its value drop dramatically over the last three (3) years.  But the company was once highly-valued by Wall Street, with a market capitalization of $23.7 billion as recently as 2013.  Today, the company has dropped approximately 98% in value and sits at a market capitalization of just under $400 million.

Peabody Energy (OTCPK: BTUUQ) announced on January 26, 2016 that the U.S. Bankruptcy Court for the Eastern District of Missouri approved the company’s reorganization plan, disclosure statement, private placement agreement and backstop agreement.

The bankruptcy court’s approval will allow Peabody to begin soliciting votes from its creditors on the proposed plan of reorganization ahead of March deadline and hearing to confirm the plan.

The bankruptcy court’s approval is another step closer to the final blow for shareholders, who, according to some analysts, probably will end up with cancelled shares and no equity in the reorganized Peabody Energy.  Shareholders have been fighting to get a piece of the reorganized company, even attempting to create an official committee to assist in crafting the reorganization plan.  The bankruptcy court judge denied that request earlier this month.

SandRidge Energy Inc. (“Sandridge”) emerged from bankruptcy on October 4, 2016, shedding $3.7 billion of debt in its reorganization and trading on the New York Stock Exchange.

Our lawyers have been monitoring the financial state of many oil and gas companies, and the brokerage firms and brokers that underwrote and sold the oil and gas companies’ securities.

Sandridge filed for bankruptcy protection in May 2016, citing high debt and low commodity prices.  Judge David R. Jones last month approved the negotiated reorganization plan after it received “overwhelmning” support from Sandridge’s lenders.

Silver Law Group, The Law Firm of David R. Chase, and Ciklin, Lubitz & O’Connell have initiated an investigation in unsuitable recommendations and overconcentration in Arch Coal, Inc. (“Arch Coal”).

U.S.-based Arch Coal was the second-largest coal producer in the country as of 2015, with 128 million tons of coal sold in 2015.  Even with that lofty title, plunging oil and energy prices brought the company down.

The company, publicly traded on the New York Stock Exchange at one point but now traded on the OTC Markets, was a hot commodity in trading circles.

Sandridge Energy (“Sandridge”) and Arch Coal (“Arch”) earned court approval to emerge from bankruptcy on September 9 and September 13, 2016, respectively.  Together, Sandridge and Arch were able to shed approximately $9 billion in debt and start anew.  How nice!

If you’re a Sandridge and Arch creditor, how does that sit with you?

These companies join 100 other North American oil producers that have filed for bankruptcy protection since early 2015.  The Securities Arbitration and Investment Litigation Lawyers at the Silver Law Group, Law Office of David Chase, LLC and Ciklin Lubitz & O’Connell are currently investigating cases relating to investments in Sandridge and Arch.  Sandridge filed for bankruptcy protection in May 2016, subsequent to Arch’s bankruptcy filing in January 2016.

A report published by the law firm Haynes and Boone on August 1, 2016 found that 90 gas and oil producers in the United States and Canada have filed bankruptcy from January 3, 2015 to August 1, 2016.  Over half of the bankruptcies have come in this year alone.

According to the report, the total debt defaulted on by the 90 companies is $66.5 billion.  Some of the more notable firms listed in the report are Linn Energy, LLC; Breitburn Operating LP; Sandridge Energy, Inc.; and Atlas Resource Partners, L.P., all of which have filed for bankruptcy in the last three months, many of which were heavily recommended by financial advisors and their respective institutions.

The numerous bankruptcies are the product of oil prices’ dramatic fall from the over-$100 per barrel heaven it occupied for some time.  While the prices of the commodity have always been volatile and difficult to determine, the prices have dramatically dropped.

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