Seventy Seven Energy Makes Progress in “Pre-Packaged” Bankruptcy

SSE logoThe process of screwing over existing stockholders in favor of debtholders continues at Seventy Seven Energy (SSE). In April, MDN told you that SSE–the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago–was ordering up one prepackaged bankruptcy to go (see Seventy Seven Energy Filing for Bankruptcy, Converting Debt into Stock). Following the path of other oil and gas-related companies, SSE plans to convert existing debt into equity–turning IOUs into shares of stock. Magnum Hunter Resources just completed the process of doing the same thing and had now emerged from bankruptcy (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). Everybody is sort-of happy under that scenario–except the original stockholders who see the value of their shares of stock turned into toilet paper. They become worthless. (Note to self: Always buy bonds in the future!) SSE continues their march toward renegotiating with existing noteholders, as they announced last Friday…

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