By Justin Mikulka • Monday, April 13, 2020 – 11:47
The finances of the oil and gas industry are so dismal that the major banks that have funded the money-losing fracking boom are now exploring taking the unusual step of taking over the oil companies that cannot afford to pay back the banks’ loans.
Reuters reported that banks are exploring the option of seizing oil company assets because the more traditional route of bankruptcy will result in huge losses for the banks — while seizing assets and holding them until oil prices increase would likely minimize those losses.
Buddy Clark of law firm Haynes and Boone explained to Reuters that, “Banks can now believably wield the threat that they will foreclose on the company and its properties if they don’t pay their loan back.”