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Articles Tagged with L.P.

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Investors in Energy 11, L.P. (“Energy 11” or the “Partnership”) may be able to recover investment losses through FINRA arbitration. if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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On March 19, 2020, Energy 11 announced that it would suspend distributions to limited partners until further notice, citing “recent volatility in the market and oil prices in particular” that “has caused uncertainty to our cash flow for the remainder of 2020.  In December 2020, Energy 11 announced that it would continue to accrue distributions indefinitely, meaning that the distributions will not be paid to investors at least in the coming months of early 2021.

During January and February 2020, Energy 11 had reportedly borrowed $14 million on its revolving credit facility to fund capital expenditures for the Partnership’s in-process drilling program; these borrowings increased the outstanding balance on the revolving credit facility to $38 million.  The commitment amount for the revolving credit facility was $40 million, meaning that Energy 11 had nearly exhausted its available revolving credit.

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Investors in the Walton Land Fund companies (“Walton”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Walton has marketed a series of highly speculative private placements focused on vacant, undeveloped properties that do not generate income.  The private placements are structured as limited partnerships, and include the following:

Walton U.S. Development Fund, LP

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Breitburn Energy Partners, L.P. (“Breitburn”) is an independent oil and gas exploration company, headquartered in Los Angeles, CA, with a corporate office in Houston, TX.  Structured as a master limited partnership (“MLP”), Breitburn and its subsidiaries are engaged in the acquisition, exploitation, and development of properties in the United States for purposes of oil and gas production, in addition to natural gas and NGL (NGL is a combination of ethane, propane, butane and natural gasoline, which when removed from natural gas becomes liquid under various levels of higher pressure and lower temperature).

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Many investors in Breitburn have suffered extreme losses.  Specifically, Breitburn (OTC: BBEPQ) currently trades at $0.04 per share.  As recently as 2014, when the price of a barrel of crude oil was trading much higher, units of Breitburn were trading in excess of $15 per unit (because Breitburn is structured as an MLP, the investors own units rather than shares, as is the case with an investment in common stock).  By May 2016, Breitburn’s unit price had plunged to $0.31 per unit; shortly thereafter, the company filed for Chapter 11 bankruptcy protection. As it turned out, Breitburn – like many other MLP’s and companies operating in the oil and gas space – had greatly increased risk by borrowing money to conduct operations including oil exploration.  Once the price of oil plummeted, many companies such as Breitburn that had overleveraged their balance sheet with risky borrowing were cast into financial distress.

Brokers and brokerage firms who steered their clients into Breitburn may be liable for investment losses sustained.  For example, with respect to a recent arbitration before the Financial Industry Regulatory Authority (“FINRA”), the arbitration panel ruled in favor of investors Troy and Elizabeth Benitone, awarding the claimants $569,000.  In connection with that FINRA arbitration, the panel determined that the broker and, by extension, the brokerage firm, impermissibly allowed the investors’ account to become overconcentrated in Breitburn.

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