How likely is it that we'll go bankrupt in January 2016? How about February or March?
5 replies (most recent on top)
Chesapeake is on borrowed time. Chapter 11 bankruptcy will occur before September, 2016 if lower prices persist. That will be the best choice for the company to survive and save as many jobs as possible. Otherwise, you can only hope for someone to purchase the company and absorb its debt which is not likely.
Right on @1vuu
It's always difficult to pinpoint when that's going to happen. The path to bankruptcy for most companies is kind of like a choose-your-own-adventure type of deal. It depends on what happens at each critical stage. Right now, the exchange is kicking the can down the road if enough of the earlier maturities tender. There may be more exchanges as well which will represent future critical stages.
Also there's an issue of the 2038 and 2037 bonds that are puttable in 2017 and 2018 I believe, so there's a real maturity/liquidity wall when you consider the puttable bonds and the bonds that mature 2018-2019. This wall NEEDS to get pushed out. Management usually waits till the last moment when there no options before they file for Chapter 11, but with Evercore on board, Evercore has a fiduciary duty to recommend bankruptcy if it's the best option. But knowing Doug, he would probably push back. But that would put him a very risk position - to go against the recommendation of a restructuring advisor. And trust me - every email at this point, everything is being recorded for fair game in bankruptcy trial, so be careful of what you write. What this means is, especially if you're senior management, everything you write may be eligible for production in discovery, albeit with the most sensitive details redacted. But in my experience, from what I've seen in other bankruptcy trials, don't write anything at all if it's related to CHK bankruptcy risk. Do it via phone.
So too many moving parts to say exactly when. But the pressure points are clear. You have to look at the debt. Stock price is just an option at this point.
See this @EZKsYTi
If you listen to what people are saying on this board, it'll happen quickly. But you HAVE TO TAKE EVERYTHING with a pinch of salt