When energy prices began to plummet nearly two years ago, oil companies with billions of dollars in debt followed the path to the busiest U.S. bankruptcy court for large chapter 11 cases: Wilmington, Del. Since March, however, six publicly traded energy producers have filed for bankruptcy and five of them opted to file in Houston, Reuters reported yesterday. Lawyers who help decide where a company seeks bankruptcy protection say that the Houston court could move some cases more quickly, saving oil-and-gas companies millions of dollars in potential legal fees, which can then be used to pay creditors. More companies began to file in Houston after the court adopted a work order that aimed to expedite large cases by directing them to two of its six judges: Martin Isgur and Chief Judge David Jones. Lynn LoPucki, a UCLA Law School professor who has written about competition among courts for cases, said that the work order would make the Houston court more attractive. "Case placers would like to know in advance who would have their case." Soon after the rule change, Southcross Holdings LP, a pipeline operator, filed for chapter 11 in Houston. In just two weeks, Judge Isgur confirmed a bankruptcy plan that cut $700 million of its debt. Such a lightning-fast case helped keep down costs. Since then, others filing for chapter 11 in Houston include Energy XXI Ltd., Goodrich Petroleum Corp. and Ultra Petroleum Corp., all based in Houston, and Tulsa, Okla.-based Midstates Petroleum Co. Inc.
Get a better picture of the venues in which E&P companies tend to file with today's ABI Chart of the Day.
More than half the assets in the global coal industry are now held by companies that are either in bankruptcy proceedings or don't earn enough money to pay their interest bills, according to data compiled by Bloomberg. In the U.S., only three of 12 large coal miners traded on public markets escape that status, separate data show. The largest of those, Consol Energy, is morphing into a natural-gas producer. Climate change campaigners have been warning of the threat of stranded assets -- fossil-fuel reserves that can never be exploited if the world hopes to avoid 2 degrees of warming -- since at least 2012. If the world is to limit global warming to below 2 degrees, then between two-thirds and four-fifths of such reserves must stay in the ground, Bank of England governor Mark Carney said in a speech last September, citing IPCC figures. Coal "has undergone a long-term structural decline, with little prospect for near-term recovery," Moody's analysts, led by Anna Zubets-Anderson, wrote last week. Of the four major U.S. coal regions, only the Illinois basin has good long-term prospects, they said. Central Appalachia will "cease to be a major coal producing region," while the Northern Appalachian and Powder River basins will decline too because of competition from gas.
Experts are set to discuss labor issues in coal cases on a FREE abiLIVE webinar on June 2. Click here to register!
Survey: More Parents Feel Children Should Bear Greater Share of College Financial Burden
A new survey from Discover Financial Services found that 48 percent of parents think their child should pay a portion -- or all -- of the cost, Bloomberg News reported on Monday. Four years ago, the same survey found 39 percent of parents held that opinion. Interestingly, the proportion of parents fully prepared to pay all of a kid's tuition increased from 9 percent in 2015 to 11 percent this year, perhaps reflecting that the number of very wealthy families is increasing at the same time that half the country contemplates taking ever-larger student loans to fill the gap. Most of those polled said they could spring for at least a quarter of the tuition cost. This is a hefty amount, given that the average debt for an American undergraduate who completed studies in 2014 was $28,950, a 2 percent increase from 2013. The good news for the higher education industry is that 82 percent of parents surveyed still think getting a college degree is important, and the good news for students is that 78 percent of their parents said they would help pay in some fashion. Not surprisingly, borrowing is the most common method used to pay for education, with 32 percent of parents saying that they would ask the bank for help, while 27 percent plan to rely on family savings. Four percent of parents said they'd dip into retirement funds, while only a handful, 3 percent, said they would consider refinancing their home or taking on a second mortgage.
Rising U.S. Rents Squeeze the Middle Class
Rising rents in cities across the nation are hurting the poorest residents, but those who are higher on the income ladder might be bearing the brunt of the pain, the Wall Street Journal reported on Tuesday. A study released on Monday shows that a far bigger proportion of middle-class renters in New York were squeezed by rising rents than were the lowest-income renters. The study by New York University's Furman Center examined rapidly gentrifying neighborhoods such as Brooklyn's Williamsburg section and Harlem, where rents jumped 80 percent and 53 percent, respectively, between 1990 and 2014. While the share of the poorest families struggling to afford rent in those sections increased by 7.6 percentage points from 2000 to 2014, the share of middle-income households struggling to afford rent jumped 18 percentage points. One main reason for the disconnect, the authors suggest, is that many of the poorest residents live in public housing or receive rental subsidies for which middle-income households don't qualify. They might also be more likely to leave neighborhoods altogether when rents rise. Gentrification has accelerated across the U.S. over the past decade. The share of less-affluent neighborhoods seeing large rent gains shot up to 25 percent from 2000 to 2014 from 10 percent between 1990 and 2000, according to a separate Furman Center study. In Boston, median asking rents have increased at an annual rate of 13.2 percent since 2010, far outstripping the 2.4 percent average annual increase in income.
Sign up Today to Receive Rochelle's Daily Wire by E-mail!
Have you signed up for Rochelle's Daily Wire in the ABI Newsroom? Receive Bill Rochelle's exclusive perspectives and analyses of important case decisions via e-mail!
New on ABI's Bankruptcy Blog Exchange: Most American Workers Not Ready to Cover the Costs of Retirement
A blog post examined a recent study that found that most Americans are not realistic when it comes to estimating the amount of money they will need during retirement. The cost-of-care study, conducted by Genworth Financial, a major long-term care insurance provider, estimated that the median cost to hire someone who can assist with household tasks is $3,861 per month, while the cost of a full-time home health aide is $3,813 per month. The problem, according to the post, is that a majority of current U.S. workers underestimate just how expensive it will be for them to get this assistance in the future when they eventually retire from the workforce.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
