Legacy Reserves Shares Trading For Pennies After Chapter 11 Bankruptcy Filing

Legacy Reserves Inc LGCY has made a Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District of Texas.

Chapter 11 generally provides for reorganization and usually involves a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

Legacy Reserves has received $350 million in debtor-in-possession financing that, subject to court approval, will refinance portions of its existing credit facility.

This amount, combined with cash from operations, will provide liquidity to support the Legacy Reserves continuing business operations during the Chapter 11 case, according to the company. 

The company’s stockholders have been warned that trading in shares of Legacy's common stock during the bankruptcy will be highly speculative and pose substantial risks, Legacy said. 

The company said it expects its common stock to be delisted from the Nasdaq for non-compliance with marketplace rules as a result of the bankruptcy filing. 

Legacy said it expects there will be no recovery for any equity holder in the bankruptcy. 

On Wednesday, Legacy Reserves shares were trading at 8 cents.

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