Chesapeake Energy Corp. (CHK.N) said on Tuesday that it is preparing to file for bankruptcy as soon as this week after the pioneering shale oil driller missed an interest payment worth $10 Million due on Monday.
The company’s stock was halted on Tuesday morning and its shares were down by 40%.
Oil prices have doubled since late April and investors are becoming more optimistic that the companies can pay their debts at these prices.
The Oklahoma City shale driller said that it has been negotiating with senior lenders for a $900 Million debtor-in-possession loan to help it emerge from bankruptcy proceedings and to support its operations.
“Chesapeake was a real icon of what the oil business can do. It’s sad that it has come to this, but it is also a big reminder that no one is too big to fail,” Columbus Oil’s President Darlene S. Wallace said in a statement.
The company’s debt has continued to trade at extremely distressed levels, a total of more than $9 billion.