Energy Cos. Playing Risky Game With Short-Term Credit Grab

Law360, Wilmington (July 15, 2016, 3:40 PM EDT) -- The glut of energy companies using a borrowing strategy called a defensive draw — maxing out on credit before lenders can cut off access to cash — has taken the lending market by surprise and put exploration and production firms in the driver's seat in bankruptcy court. But experts say it could dramatically tighten the credit market for years to come and may spell long-term danger for the sector.

While the tactic of defensive draws and building up a reservoir of cash to weather a bankruptcy case is not new — a similar strategy was famously used in the runup to...

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