Linc Energy’s US oil and gas business has been placed into bankruptcy, after facing a potential default on its debt.
Linc USA filed for Chapter 11 bankruptcy protection which allows the debtor to propose a plan of reorganisation to pay creditors over time and keep its business alive.
This comes after the voluntary administration of its Australian arm, relinquishing control to PPB Advisory. The company faces up to $56 million in fines related to environmental breaches caused by their experimental plant near Chinchilla in QLD but denies the allegations.
In court papers, Linc USA said if it does not begin drawing on US$10 million in bankruptcy funding, it will not be able to cover payroll and other operating costs, impacting the value of assets its hopes to sell, according to The Australian, asking the court to take up the funding request.
The fall in commodity prices has led to the bankruptcy filing with Linc USA’s vice president of corporate development Jude Rolfes, saying their company was “especially vulnerable” to falling prices due to the drilling program they launched in 2012 which ended in 2014 due to low prices.
The company also plans to sell its holdings in Alaska, Wyoming, and the Gulf Coast.
In light of the falling commodity prices, other companies have sought the chapter’s protection. Earlier this year Peabody Energy filed for Chapter 11 bankruptcy in an effort to reduce debt during the industry’s downturn.