In the latest EIA STEO Report (April 2015), the DOE projects oil prices for WTI to remain around or below $60 per barrel for the balance of 2015 and grow to $70 per barrel in 2016. In this environment of excess supplies and relatively low prices, many believe in the likelihood of an increase in bankruptcy filings in the energy sector during the second half of 2015 and into 2016. Such insolvencies can have significant effects, not only on the debtor, but also on those counterparties that have been trading physical and financial commodities with the debtor. It therefore is important for counterparties of companies with declining creditworthiness to be prepared for the road ahead and know, in advance, some of the issues that are likely to come up if their counterparty files for bankruptcy, such as:
- Safe-harbor Contracts
- Utility Motions
- Security Interests
- Asset Acquisitions
For more information, please read the full client alert.