A month ago, May 11, Chesapeake Energy Confirms it Hired Advisors to Explore Bankruptcy Options.
Chesapeake warned that it might not be able to restructure its debt nor improve its financial position. Because of that, “management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern.”
The company took an additional step to prepare for a potential bankruptcy filing by prepaying $25 million in incentive compensation to 21 top executives so that they stay motivated. This move mirrors a similar one by Whiting Petroleum, which approved $14.6 million in cash bonuses to its executives just days before it filed for bankruptcy.
Synopsis
- In the week in which Chesapeake Energy confirmed it hired bankruptcy advisors, it paid $21 million in bonuses. CHK traded between $8 and $12.
- On June 4 CHK was just under $15.
- On June 5 CHK blasted to $25.
- Then on June 8, CHK did a moon shot to $77.50. Shorts were massacred.
- Today, June 9, CHK is halted, down 65% on the day.
June 9 Energy Sector Smash
Barron’s reports Chesapeake Energy Could File for Bankruptcy. Small Energy Stocks Are Plunging
Chesapeake Energy (CHK) stock was halted on Tuesday morning after a report said it plans to file for bankruptcy. Before the trading halt, its shares were down more than 40% [Mish note 65%], sending ripples through the energy industry. Small oil-and-gas company stocks were plunging by double-digits, a remarkable shift in just 24 hours.
As the retail shorts were forced out, the market makers accumulated the shorts. Then the company was halted.
The price will plunge back towards its predetermined fate now that shorts covered between $25 and $77.
CHK ended the day down $45.67 to $24.25. That’s a 65% plunge.
Mish
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Wasnt that the CEO of Chesapeake who had to pay alimony of $800M to his wife as part of the court ordered divorce settlement. They should clawback his salary.
I think that was Hamm at Continental Resources.
Can’t they just do a secondary IPO or sell a few billion in bonds to raise some cash? haha
Passive algo trading printed fed currency.
Did CHK obtain(rd:steal) bailout moneys?
Aubrey McClendon should have stuck around. His prison sentence would have been minimal and he’d still be very rich. Was he really naive enough to think that fraud and racketeering would merit anything more than a slap on the wrist?
Direct fraud soon to be rewarded. It stimulates the economy.
Excuse me, but who would buy this company at anywhere near $70 just days after it convincingly threatened bkrpcy? Why?
Are there programs out there that only look at where the next stampede is breaking out?
And why was it halted on the way down and not the way up? Shorting at $77, if one could ever have been quick enough, would have been good.
Although suffering badly from FOMO lately, shit like this keeps reminding me that the stock market is kinda scary.
“And why was it halted on the way down and not the way up?”
George Carlin’s explanation: “It is a big club and you ain’t in it. You and I are not in the big club.”
Speculators. I have speculated on bankruptcy rumors in the past (options). If you know how to manage risk, you can make a large profit quickly. If you do not know what you are doing, it can be stressful. I once made a low risk ($800) trade on one such company (that ended up not going under) and made $8000 within a few hours after news broke. I am guessing this was a speculative play by many.
And the casino rolls on.
“The company took an additional step to prepare for a potential bankruptcy filing by prepaying $25 million in incentive compensation to 21 top executives so that they stay motivated.”
This type of looting should also be illegal.
It wouldn’t be America, if the goal was not simply to reward half literate incompetents-at-all-and-everything, for doing nothing whatsoever with their entire pathetic little lives, other than to cluelessly destroy value.
This, exactly this and nothing else, is how everyone who is currently wealthy in America, “made” all their money. And, hence, these are they guys who run every institution in America. Public as well as Private. From Boeing to The White House to The Supreme Court. There are no exceptions. After all, any American who may have tried to make money in any other way, would long since have been robbed, in order to afford paying such “bonuses” to such undifferentiated idiots.
It’s pretty sad, how something which was once so foreign to Americans as to sound positively insane; Proudhon’s famous quip that “Property Is Theft,” has by now been rendered not just sane, but even obviously true to anyone even remotely literate; by America’s freefall and descent from being a free country, into the entirely unconstrained progressive hellhole-to-end-all-hellholes it is today.
Third world country billionaires are now thinking of migrating to America 😉
Stuki, you take that back! You insult idiots!
Did CHK use bailout moneys for bonuses?