“Texas Business Bankruptcies Spiked, then Tapered Off in 2016”
For the second year in a row, bankruptcies involving Texas-based companies significantly increased in 2016 – though the number of new filings slowed considerably during the final five months of the year.
Legal and financial advisers say there are still dozens of oil and gas companies that are on the verge of insolvency and that another drop in commodity prices will lead to another wave of corporate bankruptcy filings.
“We are not seeing the wave of E&P bankruptcies that we witnessed earlier, but there is still a lot of distress out there, and there’s still a lot of first lien debt that is non-performing,” says Thompson & Knight partner Tye Hancock, who specializes in oil and gas bankruptcy. “A lot of it depends on where the assets are located,” Hancock says. “The cost of performing in North Dakota is a lot more than in the Permian Basin.”