An offshore oil firm in another state recently filed for bankruptcy protection. The Chapter 11 bankruptcy filing took place on a Tuesday, with the company’s goal being to restructure its current debts. When companies in Massachusetts are struggling financially due to industry or economic factors, they likewise may take advantage of this type of bankruptcy protection.
In its bankruptcy filing, the company — Seadrill – cited liabilities surpassing $20 billion. One of the reasons for the bankruptcy filing is that the petroleum industry is still fighting with some low prices. Before filing for bankruptcy, the firm trimmed several thousand positions starting in 2014. It also spent over a year negotiating with creditors to make changes to its remaining debt obligations.
Oil drillers who work offshore are especially susceptible to sudden oil price drops. For instance, a brief drop to less than $30 a barrel occurred in the early part of 2016. Offshore drillers cannot recover from these drops very easily because they invest for the long haul and cannot pull back rapidly in the same way that more flexible shale oil companies can.
Sometimes situations beyond their control cause companies to experience financial challenges that drive them to filing for bankruptcy protection. Fortunately, a Chapter 11 bankruptcy filing can essentially help companies in Massachusetts to clean up their balance sheets while not necessarily affecting their daily operations. An attorney can help companies to go through the filing process properly so that their financial and business interests are protected in both the short term and the long term.
Source: usatoday.com, “Offshore oil giant Seadrill files for Chapter 11 bankruptcy protection“, Nathan Bomey, Sept. 13, 2017