January 17, 2017 Comments (0) Current Investigations

Memorial Production Partners LP Files for Chapter 11

Cypress Income Fund VIII
(Last Updated On: January 26, 2017)

 

Memorial Production Partners LP Investment Losses

Are you concerned about losses investing in Memorial Production Partners LP?   If so, the securities attorneys of The White Law Group may be able to help you recover your losses in a FINRA arbitration claim against the brokerage firm that recommended the investment.

According to their website, Memorial Production Partners LP was formed to own and acquire oil and natural gas properties in North America. The Company’s properties are located in South and East Texas and consist of mature, legacy onshore oil and natural gas reservoirs.  The company is based in Houston, Texas.

Memorial Production Partners LP Files Chapter 11

Memorial Production Partners LP (Nasdaq: MEMP) announced Jan. 16 it filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code after coming to terms with more of their lenders.

The move was expected since December, when the master limited partnership first entered into a plan support agreement with holders of 50.2 percent of the partnership’s senior notes due in 2021 and 2022. That figure has since increased to about 69 percent. The company then announced on January 13 it reached a definitive plan support agreement with the lenders of all of its loans under its revolving credit facility.

Memorial’s operations and production are expected to continue as normal during the process. They plan to eliminate more than $1.3 billion in debt from its balance sheet through the restructuring.

The company currently is not seeking debtor-in-possession financing because it expects to have sufficient liquidity to continue its operations and meet its obligations, including paying employees, customers and vendors.

MLPs are Complex and Risky

Master Limited Partnerships (MLPs), like Memorial Production Partners LP are a type of limited partnership that is publicly traded. MLP’s receive the same tax benefits of a limited partnership combined with the liquidity of a publically traded security. In order to be classified as an MLP the partnership must receive 90% of its cash flow from a “qualifying source” – such as real estate, natural resources or commodities.

MLPs have increasingly been used to invest in the energy sector and are often sold to investors seeking income.  However, MLPs are extremely complex and risky, making them only suitable for wealthy, sophisticated retail investors or institutional investors.  They are also a dream product for Wall Street because of the fees they generate, which may cause unscrupulous financial advisors looking to maximize their own commissions to recommend them improperly..

The White Law Group continues to investigate the liability that brokerage firms may have for recommending high risk MLPs, like Memorial Production Partners LP, to their clients.

Brokerage firms that sell oil and gas MLPs are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

Free Consultation

If you suffered losses investing Memorial Production Partners LP or another MLP and would like to discuss your litigation options, please call The White Law Group at 888-637-5510 for a free consultation.

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

For more information on The White Law Group, visit www.whitesecuritieslaw.com.