Frontera Resources Holdings LLC filed for Chapter 7 liquidation last Thursday (21 July) with approximately US$30mln of 10% convertible notes due to be redeemed on 1 August.
Frontera Resources Corporation (FRR) insists that the notes were issued by the subsidiary “on an unsecured basis and without a parent company guarantee”.
In light of possible legal action from the creditors to try and recoup some of the debt, FRR is seeking a declaration from the liquidator that it is not liable for payment.
SP Angel was critical of the oil and gas firm, stating: “That a management team would not think that they owe monies that were borrowed either shows intellectual deficit, moral deficit, or both.”
The broker added that the issue may affect the company’s future funding options.
Frontera, meanwhile, said its own operations are progressing on schedule and should lead to an increased production of oil and gas which will help boost revenues.
“As we continue to progress our work in Georgia, as well as our other Greater Black Sea initiatives, we are encouraged by ongoing results from our operations,” said chairman and chief executive Steve Nicandros.
Shares were down 0.02p, or 19%, to 0.09p.