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Chesapeake Energy Corp.  (CHK) - Get Free Report said Sunday that it has filed for Ch. 11 bankruptcy in the Southern District of Texas. 

"We are fundamentally resetting Chesapeake's capital structure and business to address our legacy financial weaknesses and capitalize on our substantial operational strengths," said CEO Doug Lawler, adding that it would come out of the bankruptcy "stronger."

Chesapeake intends to use the bankruptcy proceedings to cut around $7 billion in debt, shore up its balance sheet and restructure its legacy contractual obligations to build a "sustainable" business, said the company, noting that it will operate as ordinary during the Ch. 11 processes.

The move comes amid a tough time for energy companies and as the Covid-19 crisis has put a damper on travel worldwide. 

As part of its "restructuring support agreement," Chesapeake is securing $925 million in "debtor-in-possession" financing from some lenders under the company's revolving credit facility. 

The company says the financing package will give it the resources needed to pay its operations during the Ch. 11 reorganization proceedings. Chesapeake and some lenders have also agreed to the principal terms of $2.5 billion in exit financing. In addition, it has secured noteholders to backstop a $600 million rights offering upon exit, it said in a statement.

"We look forward to working productively with our suppliers, business partners and all stakeholders throughout this process," said Lawler.

The company closed down to $11.85 on Friday trading on the New York Stock Exchange -- a nearly 93% year-to-date fall.

Trading was halted on the company earlier this month after reports that they would file for bankruptcy.