You've received a letter regarding your surface lease in the mail, and it's clear that the operator on your land is having financial difficulties....but what does that letter really mean?
Landowners should be aware that:
- A company is insolvent if it cannot cover its expenses. Insolvency does not mean that the company has entered a formal bankruptcy or receivership process.
- When a company is in receivership, it means that assets that were once put up as collateral to secure a particular debt are being sold in order to satisfy the creditor.
- If a company is in bankruptcy, assets are being sold and the money is being pooled to repay as many creditors as possible.
- When a company is under creditor protection, it means they are trying to restructure in order to continue operating, which usually means negotiations with its creditors and shareholders.