Royalty holders that believe their resource royalties are an interest in the land and are therefore an obligation of a new owner of the property when acquired through an insolvency proceeding, may find in reality that their interest can be subordinated or eliminated all together.
The duty of directors is always to direct the affairs of the corporation so as to maximize its value for the benefit of its stakeholders. When a corporation is solvent, those stakeholders are the corporation’s shareholders. When the corporation is insolvent, its creditors take the place of the shareholders as the residual beneficiaries of any increase in its value.
Energy companies will seek bankruptcy protection with the support of their secured creditors. They will retain a great deal of the equipment and restructure their unsecured creditors, including suppliers, sub contractors and lease obligations.