According to Reuters, Patriot Coal filed for bankruptcy protection on in May 2015, just 18 months after emerging from its previous Chapter 11. The bankruptcy filing has been prompted by low energy prices. In order to support its mining and marketing operations during bankruptcy, the company has secured up to $100 million in financing. Patriot Coal has listed assets and liabilities of more than $1 billion in its bankruptcy petition. Patriot Coal also has 1.4 billion tons of proven and probable coal reserves. In the prior bankruptcy, Patriot received an agreement with its former parent Peabody Energy to provide $400 million to cover health care benefits for retired mine workers.
Patriot Coal is only one of several energy related companies our firm has been tracking through bankruptcy including Xinergy Ltd, Dune Energy Inc, BPZ Energy Inc, RAAM Global, Sabine Oil & Gas Corp., and Quicksilver Resources Inc. In addition, Walter Energy Inc, another coal produce, has skipped an April interest payment on its debt
Our offices continue to report on investment losses suffered by investors in energy and oil and gas related investments that brokerage firms have increasingly recommended to retail investors in recent years. Investors have been exposed to energy investments through a variety of investment vehicles including private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and even individual stocks.
Oil and gas related investments have been recommended by brokers under the assumption that oil & gas would continue to be sold at around $100 and increase steadily over time. However, last summer the price of oil & gas plummeted due to a strengthening dollar and increased global supply of oil and remains below $60 to this day. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.
Before recommending investments in oil and gas companies, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Many of these companies, such as Patriot Coal, relied upon high energy prices in order to sustain their operations. As reported by the Wall Street Journal the drop in oil and energy prices and the industry downturn has made it difficult for many companies to refinance their debts.
Brokers who sell oil and gas products are obligated to understand the risks of these investments and convey them to clients. Investors who have suffered losses may be able recover their losses through securities arbitration. Our consultations are free of charge and the firm is only compensated if you recover.