It starts like this: Reuters reports that “sources” said that a company has hired “restructuring lawyers.” A sign of an impending debt restructuring, such as a bankruptcy. And shares plunge.
This is what happened Monday morning to Chesapeake Energy, the second largest natural gas producer in the US, after it was reported that it had engaged restructuring advisors Kirkland & Ellis. Shares, already reduced to near-penny-stock territory, plunged another 50% to $1.50, at which point trading was halted.
To soothe our rattled nerves, the company said that it “currently [emphasis mine] has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.”