February 10, 2016 Comments (0) Blog, Current Investigations

Investor Alert: Escalera Resources Co. Files Chapter 11

(Last Updated On: September 6, 2016)

Have you suffered investment losses in Escalera Resources Co.? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

According to their website, Escalera Resources Co. is headquartered in Denver, CO and has two operating divisions.

Escalera Resources Co., the parent company, has an 87.6% working interest in the Catalina unit, a natural gas CBM field in southwestern Wyoming. In addition, the Company has non-operated working interests in other producing acreage within the Atlantic Rim. Eastern Washakie Midstream LLC, a wholly owned subsidiary, owns and operates a pipeline that transports gas from the Catalina unit to the Southern Star Pipeline.

Escalera  announced on January 29, 2016, it filed its plan of reorganization with the U.S. Bankruptcy Court for the District of Colorado  and subsequently filed an accompanying disclosure statement on February 8, 2016.

Unfortunately for investors, “the plan” provides for the restructuring of the Company’s operations, debts and capital structure and, among other things, contemplates the cancellation of all of the Company’s common stock and Series A Preferred Stock, with neither class of stock receiving any consideration or distribution in connection with the Company’s reorganization. The plan is subject to the vote of the Company’s creditors and the review and approval of the Bankruptcy Court.

In October 2015, Escalera voluntarily delisted its common stock from The Nasdaq Stock Market (“Nasdaq”) due to the Company’s non-compliance with the minimum stockholders’ equity and closing bid requirements for continued listing on the Nasdaq Capital Market.

Escalera Resources Co. is a Reg D private placement. The trouble with private placements, is that they involve a high degree of risk and are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds. An additional risk inherent to these offerings is also the general risk that comes with the energy market – a market that has seen enormous losses over the last few years due to the declining cost of oil and other energy commodities.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling oil and gas private placements like Escalera Resources Co.

Broker dealers that sell private placements are required to perform adequate due diligence on all investment recommendations to ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

However, another problem with Reg D private placements is that the high sales commissions and due diligence fees the brokers earn for selling such products sometimes can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments or to outright misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.

Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes and if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Escalera Resources., please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.