Quote:
Originally Posted by Ashartus
Except often a lot of the liabilities can be serviced. A bankrupt oil company generally has remaining assets as well as liabilities. The previous court decisions were allowing the receiver to disclaim the liabilities and sell the assets; this decision means those assets have to be used towards addressing the liabilities first. Probably has some negative short-term consequences, particularly for investment, but better in the long run for Alberta taxpayers and the responsible players in the industry.
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They were always used towards addressing the liabilities first. Debt from banks being a liability.
Either way, the result of this ruling was going to be an increase in either OWL rates (if upheld) or debt interest rates on small cap producers (if overturned). The industry was going to pay more regardless. It just passes on the expenses from the CNRLs of the world to smaller cap companies in the form of higher financing costs.