When it comes to restructuring finances under the looming shadow of bankruptcy, there’s a lot of pressure to exit bankruptcy as soon as possible. This requires a knowledgeable counsel that can represent the debtor firmly. Over 37 North American oil producers have filed a Chapter 11 in 2015. With the recent bankruptcy filing of Texas based company, Magnum Hunter Resources, and the downturn in the oil industry, many speculated that this was coming.
The oil and gas market experienced a severe drop this past year forcing some companies to file bankruptcy and shut their doors. The reason stems from oversupply.
In the past six years, United States production has almost doubled, creating a surplus of oil in the U.S., which forces the price of oil down in order to remain competitive.
What’s Happened to the Oil Industry
The price reduction in turn causes companies to restructure their costs in order to be seen as a viable competitor in the market. Some companies weren’t able to adjust to the dramatic market change, and like Magnum Hunter, filed for Chapter 11. Texas has seen most of the repercussion of the recent spike in oil production, and many of the 2015 filings have been located in Texas.
While bankruptcy can seems like a devastating black mark on a company, it should be seen as a second chance to breathe and sort out all of the assets of the company, without the constant stress of creditors calling.
Our team at DelCotto Law Group is very aware of the crisis many oil and gas companies are facing. The volatility is similar to years of coal market issues seen in Kentucky and the central Appalachian region as a whole. DLG has worked over many years with local Kentucky companies to bring them through the process of restructuring their finances and working towards a solution that benefits their company.
In any bankruptcy case the most important aspect, whether a Chapter 7 filing for an individual, or a business filing Chapter 11, is strong, trustworthy counsel. DelCotto Law Group has handled many energy cases over the past decade, giving our team plenty of experience as a knowledgeable counsel.
- WSJ, “Across the Oil Patch, Firms are Going Bust,” 11/20/2015