\ Oil and gas company files for reorganization under Chapter 11 | Law Office of Gordon Mosley

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Oil and gas company files for reorganization under Chapter 11

Businesses in Texas and across the country who are facing financial problems can be of various sizes, shareholders and numbers of employees. They can range from massive, to mid-sized to small. For all of these businesses, an option to achieve a better financial position is Chapter 11 bankruptcy. For these businesses, a reorganization under Chapter 11 is not a sign that they are giving up on their hopes to build and maintain their business. It simply means that they are using the Chapter 11 bankruptcy laws to deal with debt and other issues.

An oil and gas company that is $3.25 billion in debt has sought Chapter 11 bankruptcy protection. The worldwide reduction in prices of oil and gas is hurting many companies and has played a role in this decision. The company has issued a plan to provide equity to junior lenders once the company has been restructured. In exchange, they would have $1 billion in debt forgiven. There will also be offers of new loans for nearly $500 million. Creditors must vote on the plan and it must be approved by the bankruptcy court. This particular company has a goal of December 1 for the plan to be approved. The speed has to do with the current economic climate.

Debts can accrue for a multitude of reasons. This can happen in any kind of business regardless of what kind of product or service they are providing. Chapter 11 is a potential lifeline for these businesses to get a handle on debt, reorganize it, and move forward without crippling debt that can cause a business to shut down. Of course, there are other options for businesses to consider. It depends on the problems the company faces and what they would like to achieve with the bankruptcy.

Many businesses in Texas rely on the oil and gas industry as their foundation, but the fortunes of those businesses can change as the price of oil fluctuates. The changes to the economic landscape can cause companies that might have been on solid footing to have issues that make it necessary to file for Chapter 11 to keep their business going. Those who are having any financial problems with their business and need to consider filing for Chapter 11 bankruptcy should speak to an experienced bankruptcy attorney.

Source: Wall Street Journal, "Samson Resources Files for Bankruptcy Amid Oil Slump," Stephanie Gleason and Matt Jarzemsky, Sept. 17, 2015

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