According to a MarketWatch report published in May 2016, oil and gas production company Linn Energy has filed for Chapter 11 bankruptcy after it reached an agreement with lenders “to restructure its $8.3 billion debt load and obtain $2.2 billion in fresh financing.” The securities and investment fraud law firm Fitapelli Kurta is interested in hearing from investors who have complaints regarding Linn Energy.
Linn Energy is an oil and gas producer with efforts focused in “the Colorado Rockies, California, Hugoton Basin, Mid-Continent, Permian Basin, east Texas and north Louisiana, Michigan, Illinois and South Texas,” according to MarketWatch, with assets of approximately $11.6 billion.
Per the report, Linn Energy has said its lenders, who hold more than 66% of its credit facility, agreed to “broad terms” of a restructuring deal, to let Linn Energy spend the cash securing its debt, and to contribute to the funding of a $2.2 billion term loan. Linn Energy’s publicly traded affiliate company, LinnCo, has also filed for bankruptcy.
One potential problem of Linn’s restructuring, according to MarketWatch, might lie in the fact that Linn Energy is a partnership: “Partnerships, as opposed to corporations, take advantage of a structure that allows companies to avoid paying corporate income taxes. Investors’ hunger for yield fueled a boom in these partnerships, which pay out their available cash to investors.” Partnerships such as these “bankrolled the shale boom,” but have historically suffered with falling commodity prices. According to MarketWatch, declining oil and gas prices have “forced” some energy companies into debt restructuring, and investors face the risk of large tax expenses resulting from taxes on debts otherwise eliminated by partnership status.
Earlier this spring, Linn Energy investors were offered an opportunity to exchange units for stock in LinnCo. According to MarketWatch, however, “Shares in both companies are likely to be wiped out now that they are in bankruptcy, but the swap could address the tax issue for investors.”
If you have complaints regarding investments in Linn Energy or LinnCo, call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. You may be entitled to recoup your losses. All cases are taken on contingency: we only receive payment if and when you recover money. You may have a limited window to file your complaint, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.