As the price per barrel of oil remains 50 percent below where prices were just two years ago, it is no surprise that bankruptcies related to oil and gas companies are on the rise. According to one industry publication, 42 oil and gas companies filed for bankruptcy protection in 2015, with those cases having a combined debt load of $17.85 billion and roughly half of the debt being unsecured. As of the writing of this article, at least 21 oil and gas producers have filed for bankruptcy in 2016 alone. Some sources in the industry think that the increased trend of oil-and-gas-related companies seeking bankruptcy protection will continue for the foreseeable future.
The production and exploration of oil and gas is highly regulated. When highly regulated companies seek bankruptcy protection, the courts and litigants are required to not only grapple with the requirements of the Bankruptcy Code, but with state and federal regulations as well. These state and federal regulations can disrupt the “routine” priorities of creditors within the bankruptcy case and tilt the dynamic of the debtor’s obligations to make payments to certain creditors.
For the full article, download “A Plug for Priority Claims in Oil and Gas Cases.”