Citing the need to eliminate $7 billion in debt and conduct a comprehensive restructuring of its balance sheet, Oklahoma City-based Chesapeake Energy officially filed for Chapter 11 protection Sunday in U.S. Bankruptcy Court in the Southern District of Texas.
The bankruptcy of Chesapeake, which had a market cap of only $115 million at the end of business Friday, is unquestionably going to be a bonanza for corporate law firms and financial advisors. Seven major law firms are already involved and they have been working on the pre-packaged restructuring for several months.
As expected, Chesapeake General Counsel James Webb selected Kirkland & Ellis as its lead debtors counsel and Jackson Walker as its local counsel in Texas.
The energy company selected Alvarez & Marsal as its restructuring advisors and Rothchild & Co. and Intrepid Financial Partners as its financial advisors.
Chesapeake’s board of directors has hired Wachtell, Lipton, Rosen & Katz as its legal counsel.
The company’s press release states that Sidley Austin is serving as legal counsel to MUFG Union Bank, the DIP facility agent and exit facilities agent, which also hired RPA Advisors as financial advisor and Houlihan Lokey Capital as the investment banker.
Davis Polk & Wardell and Vinson & Elkins are serving as co-legal counsel and Perella Weinberg Partners and Tudor, Pickering, Holt & Co. are serving as investment bankers to an ad hoc group of Chesapeake’s first lien last out term loan lenders.
Investment banker Franklin Advisers has hired Akin Gump Strauss Hauer & Feld as its legal advisor and FTI Consulting as its financial advisor.
The corporate restructuring has been assigned to U.S. Bankruptcy Judge David Jones in Houston.
According to Chesapeake’s press release, “Chesapeake entered into a Restructuring Support Agreement (“RSA”) with 100% of the lenders under its revolving credit facility, holders of approximately 87% of the obligations under its Term Loan Agreement, approximately 60% of its senior secured second lien notes due 2025, and approximately 27% of its senior unsecured notes, pursuant to which Chesapeake will implement a Chapter 11 plan of reorganization to eliminate approximately $7 billion of debt.
“As part of the RSA, the Company has secured $925 million in debtor-in-possession (“DIP”) financing from certain lenders under Chesapeake’s revolving credit facility, which will be available upon Court approval,” the announcement stated.
Here is a link to Chesapeake’s complete statement: http://investors.chk.com/2020-06-28-Chesapeake-Energy-Corporation-Commences-Voluntary-Chapter-11-Process.