Annual Institute on Mineral Law
Abstract
There are three general categories of risk that a contract counterparty faces: (i) credit risk; (ii) avoidance risk; and (iii) business risks. When thought of as a timeline of risks, those categories loosely represent: risk to current transactions (by the risk of nonpayment); risk arising from past transactions (by the risk of avoidance); and risk to transactions in the future (by the risk of loss of future value). These risks can be managed and mitigated inside and outside of the bankruptcy arena through various means, including obtaining security interests, thoughtful structuring of business and contractual relationships, and taking advantage of various rights within the bankruptcy process. If recent history has taught us anything, it is that no enterprise (regardless of size or market share) is immune from bankruptcy risk. Thus, it is important to identify the risks and have a plan for mitigating and managing those risks both before and after they manifest.
Repository Citation
Bennett, David M. and Richter, Katharine Battaia
(2010)
"Managing and Mitigating Bankruptcy Risk in the Oil and Gas World,"
Annual Institute on Mineral Law:
Vol. 57, Article 17.
Available at:
http://digitalcommons.law.lsu.edu/mli_proceedings/vol57/iss1/17