Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Atlas Resources Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: August 24, 2016
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Oil and gas producer Atlas Resource Partners LP recently announced that it had filed for Chapter 11 bankruptcy protection, according to Bloomberg. Its reorganization plan calls for Atlas Resources to remove $900 million in debt and cut $80 million in interest costs.
Atlas Resources spirals into debt
Atlas Resources claimed in its recent financial statement that the collapse of the oil industry has severely impacted company revenues. As prices in the oil industry have been slow to rebound, the company’s debt load began to mount, which caused it to become insolvent. In its court filings, Atlas Resource listed $1.3 billion in assets and $1.5 billion in liabilities.
Atlas Resources’ restructuring plan
As part of the reorganization plan, $668 million of senior secured notes will be converted into a 90 percent equity stake in Titan Energy LLC, the newly formed business. The Wall Street Journal reported that the company will raise financing to pay down the debt by liquidating its natural gas and oil hedge assets. The company will also pay all unsecured creditors in full, while second-lien creditors will receive the remaining 10 percent equity stake. These creditors will also provide a $250 million credit facility with a new interest rate.
Eighty percent of senior lenders and all second-lien lenders and revolving credit facility lenders voted in support of the plan. In turn, the company will emerge from the bankruptcy process as a viable business model. Atlas Resources intends to emerge from the bankruptcy period by the end of the month with $690 million in total funded debt.
The significance of the Atlas Resources filing
The company joins a growing list of oil service companies that have fallen into insolvency since the historic drop in the fuel sector. Bloomberg reported that over the past 18 months, more than 83 North American oil and gas production companies have filed for Chapter 11 bankruptcy protection, which has amounted to over $61.2 billion in total debt.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
As you may have noticed, Atlas Resources is just one of multiple oil companies filing for Bankruptcy. For more on this, check out our previous blog posts:
- C&J Energy Services Ltd. Files for Chapter 11 Bankruptcy Protection
- China Fishery Group Ltd. files for Chapter 11 Bankruptcy Protection
- Chaparral Energy Inc. files for Chapter 11 Bankruptcy Protection
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