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U.S. oil and gas producer Energy XXI Ltd. said today it had delayed paying the interest due on the debt of one of its subsidiaries, as it continues to work with advisers to slash debt, Reuters reported. Energy XXI said that it was delaying interest payment due on March 15 on Energy XXI Gulf Coast Inc.’s debt, commencing a 30-day grace period. The company, however, paid the interest on the debt of one of its other subsidiaries, EPL Oil and Gas Inc., that was originally due on Feb. 16 and was deferred. Energy XXI, which owes about $3.3 billion, said in a regulatory filing this month that it may file for bankruptcy if oil prices remain low. Read more.

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Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt with ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy. 

Coal miner Foresight Energy LP said that it may file for chapter 11 protection if it does not reach an out-of-court restructuring agreement with its lenders, Reuters reported today. The company, which said its auditors have raised going concern doubts, suspended its quarterly distribution to unitholders and its forecast for 2016, pending the negotiation with its lenders. Decreasing demand for coal, stricter environmental controls and increasing competition from natural gas have pushed four big coal miners, including second-largest U.S. miner Arch Coal, into bankruptcy protection over the past year. Peabody Energy Corp., the largest U.S. coal producer, said this month that its lenders are pushing to restructure its $6 billion debt through bankruptcy. Foresight Energy is in talks with a majority of the holders of its 2021 senior notes to resolve a litigation. The company said today that it had defaulted or may default on other debt agreements.

Dodd-Frank gave the Federal Deposit Insurance Corp. authority to take over and oversee the reorganization of so-called systemically important financial institutions whose failure could pose a risk to the economy. However, no one can be sure the FDIC will follow its resolution strategy, which leads many to believe Dodd-Frank will be bypassed in a crisis, according to a Wall Street Journal commentary on Friday. The solution is not to break up the banks or turn them into public utilities. Instead, the commentary says that a step further than Dodd-Frank should be taken: Make big-bank failures feasible without tanking the economy by writing a process to do so into the bankruptcy code through a new amendment — a “chapter 14.” Chapter 14 would impose losses on shareholders and creditors while preventing the collapse of one firm from spreading to others. It could be initiated by the lead regulatory agency and would begin with an over-the-weekend bankruptcy hearing before a pre-selected U.S. district judge. After the hearing, the court would convert the bank’s eligible long-term debt into equity, reorganizing the bankrupt bank’s balance sheet without restructuring its operations.

Oil and gas explorer Magnum Hunter Resources Corp. struck a deal in court yesterday to resolve the first of several requests to exit burdensome pipeline agreements as part of its restructuring, Dow Jones Daily Bankruptcy Review reported today. Instead of arguing for the right to tear up pipeline agreements with Texas Gas Transmission LLC, which committed to expanding a pipeline system that stretches from Louisiana to Ohio, lawyers for both sides announced a deal that gives Magnum Hunter an out. Texas Gas lawyer John Melko told the U.S. Bankruptcy Court in Wilmington, Del., that in return for allowing Magnum Hunter to reject the pipeline agreements, Texas Gas would get a $15 million unsecured claim against Magnum Hunter in its bankruptcy case. Magnum Hunter's pending repayment plan allows unsecured creditors to choose between receiving cash or equity. Read more. (Subscription required.) 

Will exploration and production hit bottom in 2016? Be sure to attend ABI's Annual Spring Meeting in Washington, D.C., from April 14-17, as a panel of experts will be addressing this topic. Register today! 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt with ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy.

IHeartMedia Inc. said it received an order from a Texas court temporarily blocking its bondholders from stating in court that the radio broadcaster defaulted on its debt by transferring $500 million of assets to one of its subsidiaries, Bloomberg News reported today. The company, which was formerly known as Clear Channel Communications Inc., said in a regulatory filing yesterday that the State District Court in Bexar County, Texas, issued a temporary restraining order rescinding notices of default that were sent by its creditors. In addition, the court blocked the lenders from filing additional default notices based on the move. As a condition, IHeart said that it agreed not to sell or transfer any shares of its Clear Channel Outdoor Holdings Inc. subsidiary until a hearing is held. 

Aspect Software, a provider of software systems and equipment for call centers, has filed bankruptcy so it can reduce a $795 million debt burden that has limited its ability to invest in next-generation products and services, CFO.com reported yesterday. Aspect said in its chapter 11 petition filed yesterday that a capital restructuring plan backed by its creditors would eliminate $320 million of second-lien debt and convert $60 million of first-lien debt into 100 percent of the reorganized company’s equity. Over the past three years, Aspect has invested $160 million in acquisitions, technology agreements and partnerships. It serves 2,200 call centers in more than 70 countries, generating annual sales of more than $400 million.

U.S. oil and gas producer Energy XXI Ltd. may seek chapter 11 protection as soon as next week if oil prices remain low and it fails to refinance its debt, the company said in a regulatory filing, Reuters reported yesterday. Brent crude has rallied in recent weeks to above $40 a barrel, but prices are still far below the $60 per barrel break-even level for the Houston-based company. With some $4 billion in liabilities as of Dec. 31, a bankruptcy filing by Energy XXI would be the second biggest energy-related failure since a prolonged slump in oil prices has put a slew of oil and gas producers at risk of default. Energy XXI missed an $8.8 million interest payment on senior notes on Feb. 16 and has been trying to reach a deal with debt holders to restructure its balance sheet before a 30-day grace period ends on March 17. Read more. 

Will exploration and production hit bottom in 2016? Be sure to attend ABI's Annual Spring Meeting in Washington, D.C., from April 14-17, as a panel of experts will be addressing this topic. Register today!

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt with ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy.