Chesapeake Energy Corporation

Robbins Arroyo LLP: Chesapeake Energy Corporation (CHK) Misled Noteholders According to a Recently Filed Class Action

Robbins Arroyo LLP announces that a class action complaint was filed against Chesapeake Energy Corporation (NYSE: CHK) in the U.S. District Court for the Southern District of New York. The plaintiff brings the complaint on behalf of all persons who beneficially held Chesapeake’s 6.875% senior notes due 2020 and 6.125% senior notes due 2021 (“Class Notes”) from December 31, 2015 to the present, for alleged violations of the Securities Act of 1933 by Chesapeake Energy’s officers and directors. Chesapeake Energy acquires, explores, and develops properties for the production of oil, natural gas, and natural gas liquids from underground reservoirs in the United States.

Chesapeake Energy Accused of Unjust Enrichment

According to the complaint, on December 2, 2015, Chesapeake announced a proposed private debt exchange (the “Exchange Offer”) through which it would exchange and replace certain Class Notes, along with certain other notes, for newly-issued 8.00% Second Lien Senior Secured Notes due 2022 (the “8.00% 2L Notes”). Notably, only Qualified Institutional Buyers—generally those that own and invest at least $100 million in securities—were eligible to participate in the Exchange Offer. The plaintiff and class members could therefore not participate in the Exchange Offer, nor did they receive the exchange memorandum informing them of how the Exchange Offer would negatively affect their interests in the Class Notes. Importantly, the risk of the Exchange Offer was not disclosed by the company in its offering prospectus for the Class Notes, nor could it have been foreseen by the plaintiffs or the other class members at the time they purchased their Class Notes.

The complaint alleges that Chesapeake’s decision to pursue the transaction benefitting only themselves and a minority of holders of Class Notes violated the implied covenant of good faith and fair dealing. Finally, the obligations in the Class Notes were made subordinate to the obligations in the 8.00% 2L Notes, impairing class members’ right to receive payment of the principal and interest under the Class Notes and the right to sue to compel such payment. The Exchange Offer allowed Chesapeake to unjustly enrich itself by reducing its indebtedness at the expense of the class members.

Chesapeake Energy Noteholders Have Legal Options

Concerned noteholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.

 

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