Chesapeake Energy has emerged from bankruptcy proceedings after a judge approved its Chapter 11 restructuring plan, Reuters has reported, noting the company will be worth $5.13 billion now, thanks to the rebound in oil prices.
Chesapeake filed for bankruptcy protection last June, with a debt load of $9 billion amid a slump in oil prices and oil demand. It said at the time it had already secured close to $1 billion in debtor-in-possession financing that a court first had to approve before the company can use it. Chesapeake also said some of its creditors have agreed to a $2.5-billion exit financing package, made up of a revolving credit facility and a term loan.
This was not the first time Chesapeake has had dramatic troubles. During the last crisis, between 2014 and 2016, Chesapeake risked bankruptcy but managed to avoid court proceedings through a series of out-of-court debt exchanges.
Now, following the proceedings, the company's debt has been reduced by $7 billion as part of the restructuring plan, and the company has secured new financing of $3 billion.
Some creditors of Chesapeake criticized the restructuring plan, with some accusing the company of being bankrupt already, even before the crisis. They also spoke against what they saw as the company favoring some creditors over others with the returns promised after the restructuring, which vary from 130 percent to just 4 percent for unsecured lenders.
Chesapeake was among the bigger victims of the latest oil prices crisis, which saw more than 40 oil producers in the United States file for bankruptcy last year. Their cumulative debt stood at $28 billion—far higher than any other industry's cumulative debt.
As a result of this wave of bankruptcies, crude oil production has fallen, Rystad Energy wrote last month, noting that the bankruptcy proceedings will cost companies involved in them a quarter of their production, or about 200,000 bpd.
By Irina Slav for Oilprice.com
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