Struggles for the oil and gas industry in Texas and throughout the world has led to a growing number of companies and individuals in financial turmoil. With that comes the inevitable decisions that have to be made as to whether or not bankruptcy is the right option to try and get into a better financial situation. But it is not just bankruptcy that has to be decided upon. The type of bankruptcy that is the best option and most applicable to the situation might be in question. Making the decision that a Chapter 7 bankruptcy is the preferable option often requires legal help. After the decision is made, it is assured that legal assistance is required for a solid outcome and getting beyond financial challenges.
An oil and gas limited liability company had been created to buy another company’s drilling assets after a prominent oil spill has moved forward with a filing for Chapter 7 with the intention of having a liquidation. The company had privately held operations near Louisiana and is no longer in operation. With this filing, there will be a trustee appointed to sell the assets that remain. The proceeds of the sale will be distributed to its creditors. The company states that it had total assets of between $10 million and $50 million and liabilities of $500 million to $1 billion. A lack of funding left the company unable to service the debt it had accrued and made necessary the Chapter 7 for businesses.
With Chapter 7, the goal is for the company or the individual to be able to liquidate assets and clear as much debt as possible while receiving simultaneous protection. For example, a person’s home will be protected in a personal Chapter 7 as will an automobile and other assets. Businesses will have other issues to take into consideration with a Chapter 7. In recent years, lawmakers have taken steps to clamp down on the requirements of Chapter 7 to prevent abuses. Those who are considering filing need to be fully aware of the changes and how to navigate them.
In this case, an oil and gas company joins a host of others that have had financial problems leading to the decision as to whether or not to pursue bankruptcy. They have decided on a liquidation under Chapter 7. Those who are in business or in personal financial trouble and are thinking about ways to overcome those financial challenges should consider filing for Chapter 7 with help from an experienced attorney.
Source: Wall Street Journal, “Bennu Oil & Gas files for Chapter 7 Bankruptcy in Texas,” Tom Corrigan, Dec. 1, 2016