Chesapeake Energy (NYSE: CHK) finally pulled the plugged and declared bankruptcy on Sunday. This comes as no surprise because in the last couple of months there have been reports that Chesapeake Energy had hired debt restructuring advisers. Chesapeake’s share price has fallen nearly 93% since 2020, and prices have slumped as demand has slumped and the economic expansion that began in 2009 ended in February.
The advisers included restructuring attorneys Kirkland & Ellis LLP and investment bankers at Rothschild & Company who are familiar with debt restatement. Their job, or if they so choose, is to figure out what to do with the oil and gas company’s $9 billion debt. The announcement did little for CHK’s shares and it appears there is a pending CHK lawsuit investigation by investors against financial advisors.
Now, investors are already lining up to file lawsuits. Recently, InvestmentFraudLawyers.com started an investigation of Chesapeake Energy for investors to recover CHK stock losses by financial advisors. Their hotline is 1 888-628-5590. In these instances, there are other options to a traditional state or federal court lawsuit. These are private arbitration customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses.
These claims are typically filed against the financial firm that made the recommendation to the investor and these claims are generally faster and more efficient than a traditional lawsuit. The claim process is typically limited paper discovery only with no depositions involved. These claims are most often handled by experienced attorneys specializing in these proceedings and familiar with the highly regulated financial services industry. The claims are typically handled on a contingency fee basis with no recovery, no fee, terms.
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The fracking giant Chesapeake Energy has fallen into administration after a financial mess at the company which is billions in debt. Other revelations include a wine collection hidden in a broom cupboard in Chesapeake’s offices and a $1.5 million wine cellar. The extravaganza also includes a private golf course in New York City.
Will Chesapeake Energy Recover?
Many investors ask if Chesapeake Energy (CHK) will recover because gas prices have come back. The short answer is that is highly unlikely that Chesapeake Energy will recover. Investors may be tempted to buy Chesapeake stock or debt, but it would be a huge risk and mistake to do so. I remember when KMart when bankrupt and had investors calling me to buy the stock while it was going through bankruptcy. At the end of the day, it went completely belly up and left investors with $0. While I am sympathetic for employees, CEO Doug Lawler should have been more direct with investors in recent years as he struggled to find his base and positive free cash flow. Now he wants investors to believe that restructuring is the tonic to cure what ails him.
Could we see something crazy happen like Hertz stock (HTZ) and see it go up by crazy inexperienced traders, only to fall down just as fast, yes. Investors are better looking at companies like Ford (F), Veritone (VERI) or Altria Group (MO).