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Oil & Gas Bankruptcies Spike

In 2015, oil and gas bankruptcy climbed to more than $16 billion according to Oil & Gas 360, a source of news, information and analysis from EnerCom, Inc. CNN Money reported that U.S. oil and gas bankruptcies were up by 379%. 

Hodgson Russ’s Oil and Gas practice provides legal services to oil and gas clients active in the Northern Appalachian Basin and throughout the continental United States.  We represent all types of parties in complex bankruptcy and insolvency matters, including related transactional matters, loan workouts and restructurings and litigation proceedings. 

Our practice leaders caution that bankruptcy is often the costliest and least predictable route to take, offering that it is usually better to work out an agreement with creditors – though that is sometimes impossible and bankruptcy often offers a better platform for selling a troubled business.  In either case, an experienced advocate from an integrated team is needed to ensure the best possible outcome.  Typically the principal parties in an oil and gas bankruptcy are secured creditors, lessors, key suppliers, trust fund claimants, mechanic’s lienors, tax authorities, guarantors, and equity interests.  A liquidation analysis is often critical, as sometimes “turning off the lights” is the only viable alternative. 

Some other cautionary advice from our oil and gas attorneys:

  • The biggest and often costliest mistake is waiting too long before seeking counsel.
  • Keep lines of communication open.  Non-disclosure can kill the conversation.
  • Be prepared to share business plans and cash flow projections, including a budget with your major lenders and other parties in interest.
  • Evaluate collateral coverage.
  • Stay current on tax and employment obligations.
  • Watch the status of pending lawsuits.

Sometimes bankruptcy is the only option, whether it’s Chapter 7 (liquidation) or Chapter 11 (reorganization).  In any case, Hodgson Russ attorneys evaluate client matters promptly and will work to develop and implement creative solutions to advance and protect the client’s interests.