The firm has filed for Chapter 11 Bankruptcy protection in the US Bankruptcy Court for the Southern District of Texas following a signing of an agreement with senior creditors to restructure its $8.3bn debt.
As per the restructuring support agreement, Linn will spin off Berry Petroleum.
Linn acquired Berry Petroleum for $4.3bn in 2013 in order to create one of the largest independent energy producers.
The restructuring deal also includes a new $2.2bn reserve-based term loan and a term loan credit facility.
Linn Energy chairman, president and CEO Mark Ellis said: "After our review of the available options, with the assistance of our financial and legal advisors, we determined that this court supervised financial restructuring process is the best course of action for the Company and our stakeholders.
"Like many others in our industry, Linn has been impacted by continued low commodity prices.
"We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth."
The company plans to continue its operating during the restructuring process.
