Texas Lawyer Talks to Patrick Hughes About Rising Crude Oil Prices, Energy Company Bankruptcies

04/13/2009

The Boom Bust
Texas Lawyer

With the nation's unemployment rate hitting 8.5 percent in March, a level not seen in more than 25 years, and crude oil prices in the doldrums, it's not surprising that bankruptcy lawyers in Texas are busier than they have been in years.

Bankruptcy filings in Texas increased 3.1 percent in 2008 compared to 2007. While that's not a huge year-to-year percentage increase, Chapter 7s jumped by 13.1 percent, and Chapter 11 business reorganizations were up by nearly 30 percent when compared to 2007.

Bankruptcy lawyers say they expect the number of Chapter 11s to increase this year in Texas, largely because the price of a barrel of oil, which has hovered around $50 in recent weeks, affects the state's energy companies.

Patrick Hughes, a bankruptcy partner in Haynes and Boone in Houston, says it's almost a foregone conclusion that Chapter 11s will increase this year in Texas because the low price of oil is forcing companies to retool their finances.

"It's an interesting time right now. It's hard to say where interest rates and inflation will go. I don't think there's any easy fixes," he says.

...Haynes and Boone bankruptcy lawyers do a lot of work in the busy Delaware and New York bankruptcy courts but also handle matters in Texas, Hughes says.

Although the bankruptcy business is strong today, lawyers who practiced in Texas bankruptcy courts during the heyday in the late 1980s and early 1990s say the atmosphere is less frenzied.

Hughes says the Texas bankruptcy courts aren't as busy as they were nearly two decades ago because they run more efficiently, and because of some 5th U.S. Circuit Court of Appeals decisions since then.

He says, "There are issues people don't fight over that they used to fight over."

Article excerpted from Texas Lawyer.

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