In filing for bankruptcy this week, Linn Energy (NASDAQ: LINE) has become the biggest corporate casualty in the United States of the plunge in crude oil prices. The group, which is one of the 20 largest oil and gas producers in the U.S, includes Linn Co and Berry Petroleum (NYSE: BRY). It announced it was seeking Chapter 11 bankruptcy protection as part of a debt restructuring agreed with the lenders of at least two-thirds of its credit facility.

In February this year the group reported debts of $9.3 billion, making it the largest debtor of about 70 North American exploration and production companies that have recently gone bankrupt in this downturn, according to Haynes and Boone, the law firm.

Haynes and Boone has tracked 69 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015. These bankruptcies, including Chapter 7, Chapter 11, Chapter 15, and Canadian cases, involve approximately $34.3 billion in cumulative secured and unsecured debt, it says.

“As of May 1, 2016, 27 producers have filed bankruptcy so far this year. The month of April 2016 brought a surge of activity, with more Chapter 11 filings (11 total) involving more debt ($14.9 billion) than in any other single month covered by our report,” says the law firm.

A large portion of the April cases were filed in the Southern District of Texas, which experienced a wave of filings: six filings totaling $9.3 billion of debt. “Despite the modest recovery in energy prices, all indications suggest many more producer bankruptcy filings will occur in 2016,” says the Haynes and Boone Oil Patch Bankruptcy Monitor dated May 1, 2016.

Linn Energy said the holders of more than 66 percent of its credit facility had agreed to “broad terms” of a debt restructuring but didn’t provide further details. Analysts have suggested that as a ‘Partnership’ under U.S. law, its status could pose a problem for investors.

“Partnerships, as opposed to corporations, take advantage of a structure that allows companies to avoid paying corporate income taxes. Investors’ hunger for yield fueled a boom in these partnerships, which pay out their available cash to investors. Linn Energy led a revival of this status among companies pumping oil and gas and was once the largest energy producer operating as a partnership” according to the Wall Street Journal.

Linn Energy’s bankruptcy has not come as a surprise. The company warned in March that a bankruptcy filing might be “unavoidable.” Hard on the heels of its filing, Pennsylvania-based energy producer Penn Virginia (OTCMKTS: PVAH) also followed suit in filing for Chapter 11 bankruptcy protection.

Penn Virginia, which started out as a coal business and then moved into oil and gas, said it had reached a pre-packaged agreement with holders of 87 percent, or $1.03 billion, of its total funded-debt obligations to restructure under Chapter 11 protection and eliminate long-term debt by more than $1 billion. 

"Like many other exploration and production companies, Penn Virginia has been significantly affected by the recent and continued dramatic decline in oil and natural gas prices,” said interim Chief Executive Edward Cloues.

The Chapter 11 process was “the most efficient way to achieve our financial objectives and deleverage the Company’s balance sheet" he said.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com