Oil & Gas Financial Journal | May.16.2016
Stephen Phillips, co-head of Orrick’s European restructuring team, and Ron D'Aversa, chair of the firm’s global Restructuring Group, published an opinion piece entitled, “Lower For Longer” in Oil & Gas Financial Journal on how US Chapter 11 filings and UK schemes of arrangement process could help address the oil industry's debt issues. An excerpt from the article is included below.
In 2015, we saw a considerable number of liability management exercises implementing amendments to debt covenants and maturities. Given the continued depressed oil price, we expect that some more fundamental methods such as debt for equity swaps will be needed. To accomplish this, a number of companies are likely to find they will need to use formal insolvency tools to reduce their leverage and emerge from a restructuring with much less debt so that their debt service and debt maintenance covenants will be appropriate for this "lower for longer" oil price environment.