Oklahoma oil and gas producer Chaparral Energy Inc. is claiming a key advantage as it launches a bankruptcy turnaround effort: $152 million in bank accounts beyond the reach of secured lenders, the Wall Street Journal reported today. Dozens of oil and gas companies have dropped into bankruptcy in recent years, taken down by falling commodity prices. Chaparral was following the same path when, in February, it drew down the maximum allowed on its top-ranking loan. On Monday, Chaparral filed for chapter 11 protection with funds still in the bank. Instead of being forced to make concessions to lenders that would tie its hands in a restructuring, which is what often happens in bankruptcy, the cash gives the Oklahoma company a measure of freedom. When Chaparral appears today for its debut hearing in the U.S. Bankruptcy Court in Wilmington, Del., it will seek court orders allowing it to cover payroll and pay essential bills, as well as a court order authorizing it to use its free cash. Read more. (Subscription required.)
A panel of experts dissects current issues in the energy sector at tomorrow’s New York City Bankruptcy Conference. Click here to register.
Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.
