Recovery Options for Investors in Hornbeck Offshore
The Wolper Law Firm, P.A. is currently investigating claims on behalf of investors who experienced substantial investment losses arising from the Hornbeck Offshore bankruptcy. If you have experienced losses in Hornbeck Offshore as a result of a recommendation made by your brokerage firm, please contact the Wolper Law Firm, P.A. for a free, no-obligation consultation to evaluate your potential legal options.
When Hornbeck Offshore Services or Hornbeck Offshore filed for bankruptcy in May 2020, it wasn’t completely out of the blue. The company, headquartered in Covington, LA, was saddled with more than $1 billion in debt and had been working to renegotiate some of that debt before the COVID-19 pandemic ramped up in the spring of 2020, slowing the country’s economy and sinking the price of crude oil. While the restructured company emerged from bankruptcy in the fall of 2020, its investors didn’t fare as well.
The company chairman, CEO, and president Todd M. Hornbeck said, “We will now go forward with a stronger financial foundation and are well positioned for long-term success.” However, it’s important to note that owners of shares in the company have seen their equity interest disappear. Meanwhile, trade creditors and vendors have been paid and the company’s debtor-in-possession financing, secured loans, and unsecured senior bond notes have been converted or canceled for new secured debt, equity, equity warrants or cash. What’s more, Hornbeck Offshore has a new rights offering expected to generate new equity capital in the amount of $100 million.
It’s no secret that Hornbeck Offshore was facing potential financial difficulties; because of that fact, investors whose broker dealers didn’t appropriately carry out due diligence and convey the risks to their customers may have failed in their fiduciary duty to their clients. The overall energy market in the U.S. has struggled for the past several years, and there are multiple well-known energy companies that preceded Hornbeck Offshore into bankruptcy. Before offering Hornbeck Offshore stock to their customers, broker dealers had an obligation to carry out due diligence on the company’s health and business outlook in order to make suitable recommendations. Only by providing their customers with a reasonable and objective look at the pros and cons of investing in Hornbeck Offshore could financial advisors have fulfilled their professional and ethical obligations in communicating the risk fully and accurately.
In addition, concentration levels in the energy sector have become more commonplace with brokers who made recommendations within that sector. Over-concentrating a portfolio in an already volatile sector of the market further enhances risk.
When a broker dealer fails to appropriately convey the risks of a particular investment to their customers and ensure the customer understands those risks, the broker dealer’s customers may have legal recourse to recover their investment losses.
Failure to disclose the characteristics and risks of stocks or bonds may also constitute fraud. Federal and state securities laws protect customers who are victims of material misrepresentations or omissions, which constitute fraud.
Contact the Wolper Law Firm, P.A. to Explore Your Legal Options to Recover Hornbeck Offshore Losses
The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.