As the U.S. slowly emerges out of the COVID-19 pandemic, businesses are beginning to assess the losses they suffered to determine what their next move should be. While some businesses were lucky enough to withstand the financial hit their business has taken, others have been left with no choice but to file for bankruptcy. In fact, Reuters recently reported that Chesapeake Energy Corp, an Oklahoma City-based company, is expected to file for bankruptcy this week.
The source says the company is the “largest oil and gas producer to unravel after an energy market rout caused by the coronavirus outbreak.”
Reuters also said that sources familiar with the matter shared that the company is “in the final stages of negotiating a $900 million debtor-in-possession loan to support its operations while under Chapter 11 bankruptcy-court protection.” The company is also said to be “in talks with creditors to “roll up” some of its existing debt and make it part of the bankruptcy loan, bringing the total debtor-in-possession financing closer to $2 billion.” Chesapeake Energy has allegedly accrued more than $9 billion in debt which is perhaps one of the main reasons why the company has chosen to file for a Chapter 11 bankruptcy.
Sources familiar with the company’s situation are also saying that it “plans to negotiate an equity infusion from creditors to help it emerge from bankruptcy proceedings.” Reuters says that if Chesapeake survives bankruptcy, certain creditors, including Franklin Resources Inc. will take over the company in exchange for eliminating more than $7 billion of its debt.
When a business has accrued debt that it can no longer satisfy, it can file for a Chapter 11 bankruptcy, which is also referred to as a “reorganization” bankruptcy. Under a Chapter 11 bankruptcy, a business, given it qualifies, would be given a plan of reorganization in order to keep the business alive as well as pay creditors over time. Essentially, Chapter 11 bankruptcies are good for business owners who would like to keep their business operations running and still meet their financial obligations.
If you think filing for a Chapter 11 bankruptcy is a step you want to take or you need more information on this type of bankruptcy filing, the Tulsa, Oklahoma bankruptcy lawyers at the Henson Law Firm, PLLC are available to discuss this with you. Filing for a Chapter 11 bankruptcy is a big step to take and it is important that you understand all that the process entails before getting into it.
Henson Law Firm, PLLC is located at:
601 S. Boulder, Suite 600
Tulsa, OK 74119