Is CHK “Restructuring” another word for Bankruptcy?

chk-2-10-16-after-hoursStock trading of Chesapeake Energy (CHK) was halted a few times on Monday, Feb. 8, 2016 as shares broke into the $1.00 barrier and set a new 52—week low of $1.50.

Marketeer articles blame the tanking on news of CHK has hired lawyers from the firm Kirkland & Ellis to help with the restructuring process.   Many investors interpreted this as the first step to filing for bankruptcy.

CHK went into RED ALERT and issued a not so confidence building statement:

OKLAHOMA CITY, Feb. 8, 2016 /PRNewswire/ — Chesapeake Energy Corporation CHK, -4.41% stated today that Kirkland & Ellis LLP has served as one of Chesapeake’s counsel since 2010 and continues to advise the company as it seeks to further strengthen its balance sheet following its recent debt exchange. Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.

 This past December, CHK hired restructuring advisor Evercore “to shore up its balance sheet as commodity prices extend their decline.”

In most cases, the determination whether to restructure out-of-court or in bankruptcy is driven by economics. The most significant question confronting the company and creditors considering whether to participate in an out-of-court workout should be whether the workout has a reasonable prospect of solving the company’s problems.

It appears CHK is attempting the “out-of-court” process.

popcornMeanwhile investors are not buying into “nothing to see, move along” restructuring statements from CHK.   CHK closed down another few cents to $1.95 on Tuesday 2/10/16. A year ago, CHK had a 52 week high of $21.29.

Marketeer articles have ranged from “it’s not the end” to “it is the end” for CHK.

Frackorporation suggests you bookmark Market Watch for CHK, bring out the popcorn and watch CHK “restructure” itself.

 

© 2016 by Dory Hippauf

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