Just as investors in Los Angeles oil partnership Breitburn Energy Partners were hoping the worst was over as oil prices have rallied, the other shoe dropped on Thursday – make that two shoes.

First, Breitburn announced it was suspending distributions (dividends) to preferred shareholders, effective immediately. In December, Breitburn suspended distributions to holders of common shares.

The announcement Thursday morning also said Breitburn is skipping two interest payments totaling $46 million that were due Thursday. Breitburn has 30 days to make good on the payments before it is considered to be in default; the company says it wants to use that time to explore options to restructure its debt. Other oil companies have similarly skipped interest payments as they also seek to restructure their debt.

Investors reacted to these two developments with a major selloff, sending Breitburn shares down 35 percent to 40 cents, its lowest close in several years. Breitburn received a delisting warning notice from Nasdaq back in January; Thursday’s developments make it that much harder for the company to get its share price back above $1 for 10 consecutive days before the end of July as required to maintain its standing with Nasdaq.

Breitburn also announced it had put together a team of advisory firms to review its strategic options with regard to its $2.4 billion debt overhang. The oil company has retained Lazard Frères & Co. and Jefferies Group as financial advisors and the law firm Weil, Gotshal & Manges as its legal advisor.

All this is in advance of a looming May 1 deadline for Breitburn’s major bank creditors to redetermine its borrowing limit. Breitburn struck a deal on April 1 for a 30-day delay in that redetermination in exchange for lowering its borrowing limit to $1.4 billion from $1.8 billion. If the limit is lowered further, the company’s ability to refinance or restructure its debt will be much more difficult.