Taking on debt can be a prudent financial decision for growing companies, especially in the current low-interest rate environment. However, too much debt could end up leading to the downfall of Chesapeake Energy (CHK), Sears Holdings (SHLD) and Sprint (S).

Chesapeake Energy (CHK)

CHK is only one of hundreds of oil & gas companies that are struggling with their debt while oil prices continue to flounder around $40/bbl.

Reports came out a few weeks ago that CHK is trying to take some creative measures to prevent its staggering $10 billion in debt from dragging the company into bankruptcy. CHK is reportedly considering swapping some of its debt for new 1.5 lien debt. CHK bonds maturing in 2017 and 2018 were trading at just 70 and 50 cents on the dollar, respectively.

For bondholders that expect the company to eventually opt for bankruptcy, lien debt would allow them the option of giving up principle in exchange for a spot in the repayment line between first and second lien holders in the event of liquidation.

As recently as February, CHK said it “currently has no plans to pursue bankruptcy,” but the market is not convinced. Shares of CHK are down an incredible 84% in the past two years.

While Chesapeake is certainly in big trouble, the next two stocks on this ignominious list are…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!