Some of the creditors who fought Chesapeake Energy’s reorganization plan contending they would be shortchanged have lost their battle as a federal bankruptcy judge has signed off on the Oklahoma City company’s plan to exit bankruptcy.
Judge David Jones of the U.S. Bankruptcy Court in Houston ruled this week in favor of confirming Chesapeake’s chapter 11 bankruptcy plan. Under the deal, Chesapeake will cut $7 billion in debt by its financial restructuring which will transfer control of the company to investment firms that own the high-ranking debt of the oil and gas producer.
The proposed surrender of control to the major investment firms was in place when Chesapeake filed bankruptcy last spring.
As OK Energy Today reported in October of 2020, Chesapeake and Franklin Resources Inc. were accused by some of the junior creditors of basing the bankruptcy on a fraudulent scheme. Judge Jones set a trial to begin in December of 2020. The junior creditors argued against Chesapeake exiting bankruptcy by turning over its operations to senior lenders including Franklin.
The Wall Street Journal quoted Judge Jones who addressed Chesapeake’s Chief Executive Robert Lawler “to remember that a lot of people have suffered a lot of pain for Chesapeake to have a second chance and I ask that you not forget that going forward.”
He wasn’t finished in his comments to Lawler.
“Chesapeake is a really big and important company. It’s an important company to our country’s infrastructure, it helps make everything work,” Judge Jones said. “But we live right now in a very, very difficult time and you have the ability to be a leader and to make a difference.”
Source: Wall Street Journal