Shares of Lonestar Resources US Inc (NASDAQ: LONE), a bankrupt US shale oil and gas producer, today surged over 210% premarket after a Federal bankruptcy judge allowed the company to access its cash collateral during the bankruptcy proceedings.
Judge David Jones approved the order on an interim basis providing a significant lifeline to the company, which owes over $500 million to creditors.
Lonestar’s bankers and creditors were ordered by the court to honour any financial obligations and transactions that arose before the petition including checks received.
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By allowing Lonestar access to the cash in its various domestic bank accounts, the judge made it possible for the company to keep funding its daily operations, hence, remaining a going concern.
The company was also exempted from marking its existing chequebooks and other financial documents such as invoices as ‘debtor-in-possession’ so long as they were active before the petition date.
Lonestar got a very favourable ruling from Judge Jones driving its stock price higher as investors expect the oil company to emerge out of bankruptcy as a much stronger entity.
Lonestar share price
Lonestar shares today surged 210% to trade at $0.758 having closed Thursday’s session trading at $0.2445.
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