Soreide Law Group is reviewing possible investor actions alleging unsuitability, misrepresentation and other sales practice violations against securities brokers and financial advisors who recommended investments in Chesapeake Energy Corp. Namely, on June 28, 2020, Chesapeake Energy Corp, who is known as a large shale-gas company, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas.
What Is Chesapeake Energy Corp?
Evidently, Chesapeake Energy Corp’s portfolio contains unconventional oil and natural gas assets located within top onshore plays of the United States. Apparently, the company of roughly 2,300 employees claims to focus on generating capital efficiencies and operating with industry-leading production and general and administrative costs.
Restructuring Support Agreement Allows Chesapeake To Eliminate $7,000,000,000 In Debt
Apparently, on June 28, 2020, the company entered into a restructuring process intended to align its balance sheet and capital structure with its “diverse asset portfolio” and “strong operating platform.” Particularly, it established a Restructuring Support Agreement with all of its lenders under its revolving credit facility, holders of about 87% of obligations under the company’s Term Loan Agreement, about 60% of senior secured lien notes due 2025, and about 27% of its senior unsecured notes.
Evidently, the company has put together an arrangement for $2,500,000,000 in exit financing which includes a $1,750,000,000 revolving credit facility and a new $750,000,000 term loan. Also, its term loan lenders and secured note holders acquiesced to backstop a $600,000,000 rights offering upon exit. Apparently, Chesapeake will be able to rely on $925,000,000 in debtor-in-possession financing to help it reset its business and strengthen its capital structure.
It seems that factors leading up to the bankruptcy filing included natural-gas futures trading at historical lows and an oversupply of natural gas. Chesapeake also experienced significant debt upon expansion which it was not able to pay off. And with the coronavirus causing oil prices to sharply drop, it hampered Chesapeake’s ability to focus on oil exploration. Chesapeake indicated that commodity prices and the tightening of the credit markets had placed the company in a position where bankruptcy seemed like the only viable option to resolve its debt problem.
Apparently, on June 26, 2020, CHK shares equaled $11.94. As of June 30, 2020, shares equaled $4.20.
Financial Advisors Could Have Inappropriately Recommended Chesapeake Energy Corp Investments
It is possible that financial advisors provided bad advice and sold risky and inappropriate investments including Chesapeake Energy Corp products to vulnerable investors with conservative objectives and risk tolerances. Not only that, but some financial advisors could have downplayed or even omitted risks of these alternative investments to induce sales. Moreover, financial advisors and their firms potentially failed to perform due diligence before recommending investments such as Chesapeake Energy Corp.
Losses From Investing In Chesapeake Energy Corp Investments?
Did your financial advisor recommend your Chesapeake Energy Corp investments? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The law firm has recovered millions of dollars for clients who have suffered losses due to misconduct of securities brokers and financial advisors.