Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Chaparral Energy Inc. files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: July 6, 2016
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Chaparral Energy files Chapter 11
Chaparral Energy Inc., one of the largest oil and gas companies and third-biggest enhanced oil recovery operator in the U.S., has announced that it filed for Chapter 11 bankruptcy protection. According to The Wall Street Journal, Chaparral Energy, like many of its peers became the latest victim of the collapse of energy prices.
Chaparral Energy falls into insolvency
In its bankruptcy documents, the company cited the fact that it had recently failed to make interest payments to its senior bondholders. Following its 30-day grace period, it defaulted on its bonds, which meant that it owed all of its $1.6 billion debt. It currently owes $525.9 million in 7.625 percent senior notes due in 2022 to bondholders, along with $384 million in 8.25 percent senior notes owed in 2021 and $298 million in 9.875 percent owed in senior notes by 2020.
The company also stated in court documents that its financial struggles began in February after it borrowed all of the remaining funds under a $548 million credit agreement from 2010. As this move failed to build sustainable liquidity for Chaparral Energy, the company’s debts steadily grew from there on.
The reorganization plan for Chaparral Energy
Chaparral Energy stated in its initial bankruptcy plan that it plans to negotiate a debt-for-equity swap with most, if not all, of its lenders and bondholders to eliminate $1.2 billion in debt. If the company can reach an agreement, it intends to restructure its operations to emerge from bankruptcy as a viable business.
In the meantime, Chaparral will continue operations through the reorganization process.
The significance of the Chaparral Energy filing
Prior to recent Chapter 11 bankruptcy filings in the energy sector, there have been 67 companies that have sought bankruptcy protection since 2015.
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.
Otherwise, for more articles regarding oil companies filing for bankruptcy, check out:
- Ultra Petroleum files for Chapter 11 Bankruptcy Protection
- Goodrich Petroleum Corp. Files for Chapter 11 Bankruptcy Protection
- Venoco files for Chapter 11 Bankruptcy Protection
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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