Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Halcon Resources Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: July 19, 2016
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Halcon Resources Files Chapter 11
Recently, Halcon Resources, one of the largest energy exploration and production companies in the U.S., announced that it will file for Chapter 11 bankruptcy protection. According to Oil and Gas 360, the company has negotiated a prepackaged agreement with its primary noteholders to eliminate $1.8 billion from its debt total.
Halcon Resources’ mounting debt load lands it in insolvency
In 2015, Halcon had a series of debt-for-equity swaps that converted $258 million in unsecured notes into 144.8 million shares of common stock for noteholders such as Union Square Park Partners, Pioneer Investments, JPMorgan Securities, Goldman Sachs Asset Management and Franklin Templeton Investment.
In its recent financial report, dated May 9, Halcon listed only $8.6 million in cash on its balance sheet after it recorded a $539.99 million net loss for the first quarter of this year. Its stock on the New York Stock Exchange closed recently at 26.1 cents, which represented a 72 percent drop from 97 cents in less than one week.
Halcon Resources’ reorganization plan
In its bankruptcy documents, the company stated that it will restructure its balance sheet as part of a deal reached with senior noteholders. The plan calls for Halcon Resources’ annual interest debt load to be reduced by over $200 million. The debtholders will own majority shares in the newly restructured organization, while preferred shareholders will receive $11.1 million in cash and common shareholders will receive 4 percent of pro forma equity.
The Street reported that the terms of the deal will provide certain shareholders $1.02 billion in 13 percent third-lien notes by 2022, $297.2 million in 8.875 percent senior unsecured notes in 2022, $37.2 million in 9.25 percent senior unsecured notes in 2022, $315.5 million in 9.75 percent senior unsecured notes in 2020, $267.75 million in 8 percent convertible senior unsecured notes in 2020 and 5.75 percent perpetual convertible preferred stock.
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.
For more articles dealing with energy companies filing for Bankruptcy, check out:
- Chaparral Energy Inc. files for Chapter 11 Bankruptcy Protection
- Energy & Retail Lead the Way as Business Bankruptcies Increase
- SunEdison Prepping to File for Chapter 11 Bankruptcy
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
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