Oil prices remain near all-time highs and some oil companies are reporting record-breaking year-end 2007 profits. There are rumbles, but no immediate signs of lessening demand, and OPEC has announced it will keep production level. Most oil patch investors, lenders, and credit managers think they have it pretty easy.
Those doing business with large, well-financed entities are right to take life a bit easier. However, as the price and profit run-up of the last few years attracted eager money looking to cash-in on the oil boom, some of that money found homes with outfits that had more sizzle than steak
As a result, many investors and creditors currently find themselves holding positions in companies that are in, or headed for, Chapter 11. Since June 2006, there have been at least two dozen outfits (counting affiliates) that have landed in Chapter 11 – some voluntarily, some involuntarily – in Texas bankruptcy courts alone. Bankruptcy cases for oil and gas or service companies have also been filed in other jurisdictions, including that hotbed of drilling activity, New York City. In a few non-bankruptcy situations, investors and creditors have filed suit over disputes ranging from unpaid bills to securities fraud.