Robbins Arroyo LLP: Chesapeake Energy Corporation (CHK) Misled Noteholders According to a Recently Filed Class Action
April 04 2016 - 03:56PM
Business Wire
Shareholder rights law firm 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.
View this information on the law firm's Shareholder Rights Blog:
www.robbinsarroyo.com/shareholders-rights-blog/chesapeake-energy-corporation
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 benefiting 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, DDonahue@robbinsarroyo.com, or via the
shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in
shareholder rights law. The firm represents individual and
institutional investors in shareholder derivative and securities
class action lawsuits, and has helped its clients realize more than
$1 billion of value for themselves and the companies in which they
have invested.
Attorney Advertising. Past results do not guarantee a similar
outcome.
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version on businesswire.com: http://www.businesswire.com/news/home/20160404006572/en/
Robbins Arroyo LLPDarnell R. Donahue(619) 525-3990 or Toll Free
(800) 350-6003DDonahue@robbinsarroyo.comwww.robbinsarroyo.com
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