Chesapeake bankruptcy includes Louisiana entities


Chesapeake Energy Corporation has voluntarily filed for Chapter 11, a move that includes several of its Louisiana entities.

The company has filed for protection in the U.S. Bankruptcy Court for the Southern District of Texas to strengthen its balance sheet and restructure its legacy contractual obligations to achieve a more sustainable capital structure. Chesapeake will operate in the ordinary course during the Chapter 11 process.

Among the subsidiaries included in the filing are Chesapeake Louisiana L.P., Empress Louisiana Properties L.P. and MC Louisiana Minerals L.L.C.

Chesapeake entered into a Restructuring Support Agreement 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 financing from certain lenders under Chesapeake’s revolving credit facility, which will be available upon court approval.

The financing package will provide Chesapeake the capital necessary to fund its operations during the Court-supervised Chapter 11 reorganization proceedings.

The company and certain lenders under Chesapeake’s revolving credit facility have also agreed to the principal terms of a $2.5 billion exit financing, consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan. Additionally, the company has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit.

Chesapeake President and CEO Doug Lawler, says the company is “fundamentally resetting Chesapeake’s capital structure and business” to address legacy financial weaknesses and capitalize on operational strengths.

Chesapeake has filed customary motions with the Court seeking a variety of “first-day” relief, including authority to pay owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided.

Get information about the Chapter 11 filing.