CMS today publishes a White Paper examining whether there is a case for a special insolvency regime in the oil and gas industry.

The full White Paper can be found by clicking here or you can request a hard copy from one of the contacts listed below.  Hard copies are also available in our client receptions in London and Aberdeen.

We want to start the debate: we are inviting feedback and would welcome your thoughts. Following publication of the White Paper, CMS will be hosting a number of roundtables with industry stakeholders and we will report our further findings. If you would like to contribute to the debate, please speak to one of the contacts listed below or alternatively your usual CMS contact.


Restructuring and insolvency regimes have been used in many other industries as a means of cutting excess costs, consolidating market players and improving financial hygiene, with a view to long-term profitability. However, this is not happening in the oil and gas sector to the extent one would expect, despite the current market conditions.

This can be traced back to the regulation of the sector and the difficulties that secured creditors have in enforcing their rights. The regulatory restrictions imposed on E&P companies inhibit the usual operation of insolvency regimes. It is harder to monetise assets, harder and more risky for secured creditors to enforce and more difficult for insolvent debtors to jettison liabilities. Regulations affecting oil and gas companies also mean that directors are pulled in different legislative directions when trying to comply with their duties.

This could be addressed to enable the level of market consolidation required. A special insolvency regime for oil and gas companies may address some of these tensions and set out what this might involve.

Stephen Millar, a partner in the Energy practice at CMS says, "The industry is facing continued upheaval from volatile oil prices. We want to start a debate about how we work together to move the industry forward." Emma Riddle, a restructuring partner at CMS adds, "The issues involved in the interaction of oil and gas regulation and insolvency regulation are complex. This paper pulls together our thoughts on some of the challenges, and ways that these could be addressed in legislation for the future."