A judge authorized Chesapeake Energy Corp. to exit bankruptcy and cut $7 billion in debt through a financial restructuring that transfers control of the company to investment firms that own the oil-and-gas producer’s high-ranking debt.
Judge David Jones of the U.S. Bankruptcy Court in Houston said Wednesday he would confirm the fracking pioneer’s chapter 11 plan, ruling against a more junior creditor group that argued during a nearly monthlong trial that they would be shortchanged in the restructuring.
Oklahoma City-based Chesapeake joined several other debt-laden energy companies in seeking chapter 11 in the early months of the coronavirus pandemic, as demand crashed and a global price war raged. But unlike some smaller peers, Chesapeake came into bankruptcy with an exit proposal, supported by top lenders, already in place.
After approving the company’s plan during a virtual court hearing, Judge Jones addressed Chesapeake Chief Executive Robert Lawler directly, telling him “to remember that a lot of people have suffered a lot of pain for Chesapeake to have a second chance and I ask that you not forget that going forward.
“Chesapeake is a really big and important company. It’s an important company to our country’s infrastructure, it helps make everything work,” Judge Jones said. “But we live right now in a very, very difficult time and you have the ability to be a leader and to make a difference.”
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