April 15, 2016 Comments (0) Blog, Current Investigations

Update: Energy XXI LTD Files Bankruptcy Protection

(Last Updated On: August 23, 2016)

Have you suffered losses in Energy XXI Gulf Coast bonds? If so, the securities attorneys of The White Law Group may be able to help you recover your losses with a FINRA arbitration claim against the brokerage firm that recommended the bonds to you.

Energy XXI Gulf Coast, Inc. is an independent exploration and production company based in Houston, Texas with operations in the shallow waters of the U.S. Gulf of Mexico. The company issued debt to raise capital for its ventures, including the Energy XXI Gulf Coast, Inc. 7.5% 12/15/2021 bond, the Energy XXI Gulf Coast, Inc. 7.75% 6/15/2019 bond , and the Energy XXI Gulf Coast, Inc. 9.25% 12/15/2017 bond.

Energy XXI Ltd. filed for Chapter 11 bankruptcy protection in Houston on April 14, after spending $5 billion on acquisitions in the years leading up to the crude slump. The company listing $1.8 billion in assets and $3.6 billion in debt and says they have a restructuring agreement with noteholders.

With oil hovering around $30 a barrel, Energy XXI wound up buying back more than $1.7 billion in debt over seven months to cut its interest expense. In a February regulatory filing, the company said it doubted it could meet financial commitments over the coming year and continue operating. Crude’s recovery to about $40 since then hasn’t been enough.

Oil began its downward spiral in mid-2014 when crude was at about $100 a barrel. About 35 percent of exploration and production companies worldwide — some 175 firms — are at risk of bankruptcy this year, according to a Deloitte LLP study published in February. Together, these companies have around $150 billion in debt on their balance sheets, according to the report.

High-yield bonds—also called non-investment-grade bonds, speculative-grade bonds, or junk bonds—are bonds that are rated below investment grade, typically ‘BB’ or lower by Standard & Poor’s and ‘Ba’ or lower by Moody’s. They pay high yields to bondholders because the borrowers credit ratings are less than pristine, making it difficult for them to acquire capital at an inexpensive cost. Junk bonds carry an above average risk that the issuer will default on the bond. The increased risk makes them arguably unsuitable for many investors.

Brokerage-firms and investment adviser are required to make investment recommendations that are suitable for their clients in light of their clients particular investment situation – net worth, investment objectives, income, and investment experience.  Brokerage firms or advisors who sell junk bonds to unsuitable investors or fail to adequately disclose the risks of the investments can be held accountable for losses suffered through a FINRA arbitration claim.

If you have concerns regarding your investment in Energy XXI Gulf Coast, Inc.  bonds and would like to speak with a securities attorney about your litigation options, please call The White Law Group at (888) 637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

To learn more about The White Law Group visit www.whitesecuritieslaw.com.