In May MDN told you that Seventy Seven Energy (SSE), the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago, was planning to screw shareholders by devaluing their shares to worthless status and converting the company’s considerable outstanding debts into new shares of ownership (see Seventy Seven Energy Makes Progress in “Pre-Packaged” Bankruptcy). It’s called a “pre-packaged” bankruptcy–where a company cuts a deal with note holders (those who hold IOUs) to convert the debt into equity. Magnum Hunter Resources did it to their shareholders (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). A number of other companies with operations in the Marcellus/Utica are also trying it, including Warren Resources, Halcon Resources, Penn Virginia and Ultra Petroleum. A couple of others are on the cusp of doing it: Stone Energy and EXCO Resources. SSE announced yesterday they have all of their ducks in a row with debt holders and they have officially filed for their “pre-packaged” bankruptcy…
