ROCKMAN wrote:Ralfy - "C11 means less business because vendors and suppliers need the same businesses that are going bankrupt.". Actually just the opposite is generally true. If Company A flushes several $billion in bond debt and does so without having to liquidate any of its asserts its net revenue increases as well as its debt rating.
Even if it doesn't completely flush its bond/bank debt the " reorganization " of its debt (Chapter 11 is referred to as a "reorganization") the rates are generally reduced and the repayment period is extended. In essence the primary goal of the debt reorganization is to allow a company to expand operations in hopes of increasing revenue which would allow a greater opportunity to service its debt.
And that is done by Company A taking that increase in net revenue that can then be paid to the vendors and suppliers. IOW Chapter 11 filings will actually benefit those companies: more revenue spent on operations instead of repaying 100% of debt is good for the vendors. Also understand how vendors deal with operators with a problem dealing with their debt: the vendors require payment upfront. I've consulted for many small operators with questionable abilities to pay invoices. IOW more then once I've hand delivered a check to a vendor that then waited for it to clear the check before the followed up on their end.
As I pointed out early folks referring to the number of companies filing bankruptcy (typically Chapter 11) as the "death of the oil patch" have it 100% ass backwards. It actually allows those companies a chance to survive and potentially prosper. In my 41 years I've seen only one company liquidated. It's the bond investors that usually take the big hit: in Chapter 11 they are typically the lowest on the list of repayment priorities.
The magic word is "chance," and that leads to good things only in an imaginary world where there is no POD and no connection whatsoever between the finance and oil industries.