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Oil & Gas Bankruptcies Could Affect Your Jones Act Claim

Financial analysts specializing in the oil and gas industry expect several offshore drillers to file bankruptcy in the coming months.  Recently, one of the big dogs – Hercules Offshore, a Houston-based offshore drilling company, filed for Chapter 11 bankruptcy protection.  The bankruptcy filing was not a complete surprise.  The news had leaked in July 2015 – a full month before the actual filing – that bankruptcy was on its way.  This left several maritime injury lawyers with Jones Act clients scrambling to settle any existing claims against Hercules before the bankruptcy was actually filed.

The scramble was due to the “automatic stay” impact of a defendant’s bankruptcy filing on personal injury claims.  The Bankruptcy Code can be rather friendly to a failing company — imposing this automatic stay on most actions against the debtor.  If your case isn’t settled or resolved before the filing of the bankruptcy, you may have to get in line with countless other claimants and wait for scraps to fall off the table.  There are also additional legal hurdles and time limits to filing a Notice of Claims in the bankruptcy proceeding.

While there may or may not be liability insurance coverage covering your particular Jones Act claim (depending on the company and the size of the deductible under any applicable insurance policies), the point is not to wait in filing your claim.  Waiting to file a claim runs not only the risk of complete loss under the statute of limitations but the risk of diminished recoverable value caused by a bankruptcy filing.