Texas business bankruptcies jumped significantly in 2015, but lawyers and financial experts say last year’s increase is nothing compared to the tidal wave of corporate failures headed this way.Bankruptcy courts in South and West Texas saw the number of companies filing for protection under Chapter 11 of the U.S. Bankruptcy Code increase 37 percent and 65 percent, respectively, last year, according to new data provided by Androvett Legal Media.Financial and legal advisers who specialize in corporate restructuring say they have been hired during the past few weeks by scores of additional Texas businesses — most of them in the oil and gas sector — to explore their bankruptcy options.Eighteen prominent bankruptcy experts interviewed by The Texas Lawbook say that they expect the number of oil and gas companies in Texas that file for bankruptcy in 2016 to double, and that those bankruptcies will cause a domino effect that will spread to other business sectors.“The carnage is going to be terrible and widespread unless oil prices rebound quickly,” said William Snyder, head of restructuring at Deloitte in Dallas. “Bankruptcy filings are going to double.”Snyder, who is viewed as one of the nation’s leading bankruptcy experts, said Deloitte has an additional 75 oil and gas companies on the accounting firm’s danger list — companies, he said, that are “running out of cash.”“Everyone is panicked,” he said. “We are going to see some gigantic companies filing that no one even suspects.”Forty-eight oil and gas service companies and exploration and production companies filed for bankruptcy during the last 13 months — nearly all of them upstream exploration and production companies or oil and gas service companies, according to a report issued by the law firm Haynes and Boone.To make matters worse, there’s growing concern that new legal tactics being argued by lawyers for bankrupted exploration and production corporations will cause the financial distress to spread more quickly to midstream companies, which had previously been viewed as less vulnerable to the economic downturn.The distress will “expand beyond oil and gas companies to other business sectors” in Texas, including manufacturing, industrial, commercial real estate and even retail, said Eli Columbus, a partner in the bankruptcy section at Winstead in Dallas.As a result, most of the large Texas law firms are beefing up their bankruptcy practices.
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