Magazine article Business Credit

NACM Industries to Watch: U.S. Oil

Magazine article Business Credit

NACM Industries to Watch: U.S. Oil

Article excerpt

A steep downward trend in crude oil prices, dropping by nearly half since the summer, has already caused mass layoffs and now additional new bankruptcy filings in March. Factors such as these and others have made the domestic industry, as well as those that support it, one to watch for potential restructuring activity.

"The primary factor is the drop in prices," said Kit Pettit, a senior associate with the Pennsylvania firm Bernstein-Burkley, PC. "A lot of these individually run startups don't have the business experience or acumen to adjust." In July eNews and NACM Secured Transaction Services coverage, Pettit predicted potential problems concerning the industry: "There are a number of new entities or start-ups looking to get work. You may very well have companies that fail to per form properly. You may have companies that don't know what they're doing or perhaps expanded too quickly or don't have employees with enough skill or training." Pettit was not alone in the concern.

If prices hold at these levels or continue to fall, solvency struggles could increasingly affect more established companies if they are overleveraged, Pettit added. …

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