Oil and Gas Company Files for Bankruptcy Protection
Oil and gas exploration company Rooster Energy Ltd has filed for Chapter 11 bankruptcy protection after failing to fight off a major creditor. Rooster Energy’s bankruptcy filing cites its liquidity crisis to be the reason behind its failure.
The company has been struggling to stay afloat as prices of its two major commodities, oil and gas, have dipped. At the same time, management has been having trouble paying off the company’s obligations. Rooster Energy blames its senior creditor for repeatedly forcing it to make increased interest payments, thus pushing it into a cash crunch.
Rooster Energy says the company was forced to seek bankruptcy protection, as its major lender, Angelo, Gordon Energy Servicer, LLC, continues to meddle with the company’s internal operations, making it difficult for management to focus on the business. Angelo, Gordon holds $53.3 million of senior secured notes of Rooster Energy, and has been restricting Rooster Energy’s cash flows by making priority claims on its earnings. (Source: Ibid.)
Angelo, Gordon has retorted by saying the bankruptcy protection was filed without giving fair warning to the creditor.
Rooster also owes $24.0 million in senior subordinated debt, $7.1 million in unsecured trade debt, and $10.2 million in long-term trade debt to Chet Morrison Contractors. (Source: Ibid.)
The company’s financial problems have been piling up for a while. Just days before the company filed for bankruptcy, there were warnings of the impending fallout. The company filed its updated quarterly earnings but failed to provide the necessary financial disclosures within the mandated time frame. With Rooster Energy’s severe cash crunch, if the company fails to restructure its debt, it may fail to continue as a going concern.
Just a month prior to this saga, the company underwent a corporate shakeup as both its CEO and CFO were removed from their positions. CEO Robert Murphy was replaced by Kenneth Tamplain Jr. as an interim CEO until the company finds a suitable replacement.
The Houston-based, Canadian-owned Rooster Energy has major operations in the U.S. and operates in the Gulf of Mexico through its wholly-owned subsidiary. All of the company’s subsidiaries, including the one in Mexico, are now seeking bankruptcy protection.
“Rooster Energy Seeks Bankruptcy Protection Amid Lender Fight,” The Wall Street Journal, June 5, 2017.