Chesapeake Energy (NYSE:CHK) could be moving closer to bankruptcy. According to reports, major investor Franklin Resources (NYSE:BEN) -- the company behind investing firm Franklin Templeton -- has hired a law firm to assist with negotiations on some of Chesapeake's debt the firm holds. 

Setting the stage for a pre-negotiated bankruptcy

This is the second shoe to drop in Chesapeake's path toward insolvency. The company signaled the increased likelihood that it would not be able to avoid bankruptcy in early march, when it hired a law firm and bankers with restructuring expertise.

Hands on table facing one another.

Image source: Getty Images.

For Franklin Resources, the news it has brought in legal expertise of its own indicates the investment manager could be helping set the stage for a pre-negotiated bankruptcy, similar to what we saw with Whiting Petroleum (NYSE:WLL) just over a week ago. Whiting reached a deal with certain holders of its debt that would exchange 97% of shareholder equity for a significant portion of that company's debt.

With a 12% stake in Chesapeake as of the company's most recent proxy statement, and a large stake in the company's $9 billion in debt, Franklin looks to be taking steps to preserve whatever value it can before Chesapeake actually defaults. 

More tough times ahead for the oil patch

While today's news doesn't make anything official, Chesapeake Energy could be the next major U.S. oil producer to file for bankruptcy. Oil markets are severely imbalanced, and it will take many months for balance to be restored. As things stand today, the U.S. oil industry is exposed to enormous risk that could destroy billions in investor capital as more independent producers run out of rope.