Dallas oil and gas company Exco Resources filed for bankruptcy this week as executives are in discussions with its creditors to restructure its troubled balance sheet.
Exco has hired Kirkland & Ellis, which has offices in Houston and is also representing Energy Future Holdings in its bankruptcy, as its lead outside counsel to advise the company on its corporate restructuring.
The company, which had ties to the Trump administration’s Commerce Secretary Wilbur Ross, was unable to recover from the collapse in the energy market in 2014 and had been struggling to stay afloat. Exco is exploring the sale of “substantially all” of its assets as part of the reorganization.
Trading of the company’s stock was halted last month at 63 cents per share. Exco shares had been $15 at the start of 2017.
The company did secure $250 million in special financing that businesses use during a restructuring period to fund their day-to-day operations and pay its vendors. It must be approved by the court however. The group of existing lenders that offered the debt include Canadian finance firm Fairfax Financial Holdings, JPMorgan Chase and others.
“Like many other companies in our industry, EXCO’s financial position has been negatively impacted by the sustained downturn in commodity prices and uncertainty in the energy market,” Exco CEO Harold Hickey said in a statement.
“Despite having taken actions to mitigate the impact of these factors, including renegotiating certain commercial contracts, reducing costs, restructuring our balance sheet and divesting assets, we continue to face increasing liquidity pressures as we navigate the competitive environment,” Hickey said.
The company has made other filings with the bankruptcy court and expects approval from a judge to continue paying employee’s wages and certain royalty and other working interests.
Ross stepped down from the company’s board earlier this year when he was confirmed by the Senate to run the Commerce Department. He was sworn into office in February.
Investment funds managed by Ross’ private equity company took a stake in Exco in 2010 in an attempt to turn the company around, and he was elected to the board of directors two years later.
Ross sold holdings in Exco Resources in May valued between $50,001 and $100,000, according to a public disclosure filing. The stock price at the time was at more than $6.