Chapter 11 bankruptcy to benefit gas and oil company

| Jan 1, 2017 | Chapter 11

A company in another state recently stated its intention to file for bankruptcy. The gas and oil company will file for Chapter 11 bankruptcy. Reportedly, it has been struggling in light of the current low energy prices. In Massachusetts and elsewhere, bankruptcy protection may be a viable solution for a company facing financial difficulties.

The company believes that filing for Chapter 11 bankruptcy will enhance its competitive position. During the past year, it has reportedly being striving to decrease its cost structure as well as enhance operating efficiencies. Reportedly, the bankruptcy filing will allow for the elimination of over $850 million in unsecured prepayment premiums, principal and accrued interest on its balance sheet. In addition, equity totaling $200 million is expected to be injected into the company to fund its development plan.

Through its bankruptcy filing, the company will also restructure its agreement regarding the purchase and sale of crude oil with another company on terms that are more favorable to the company. The company is additionally negotiating with a bank concerning the company’s revolving credit facility, or variable line of credit. Finally, all working interest, royalty, customer and employee obligations will be paid in full.

Chapter 11 bankruptcy is available for companies in Massachusetts and elsewhere when financial issues threaten stability. This may be due to changes in the economy or in the company’s particular industry. Experienced legal guidance and support can help a company complete a bankruptcy filing in a manner that will enable the business to achieve its financial goals in spite of previous setbacks.

Source: bizwest.com, “Bonanza Creek Energy plans Chapter 11 bankruptcy“, Christopher Wood, Dec. 27, 2016