Houston’s Key Energy Files for Chapter 11 Bankruptcy

by San Antonio Attorney

Key Energy Services in Houston filed for Chapter 11 bankruptcy on Oct. 24 after months of preparing a bankruptcy plan that would get the support of creditors.

Court documents show that Key owes $1.2 billion to creditors and has $1.1 billion in assets. The energy company aims to slash debts to around $250 million.

The top unsecured creditor of the company is Bank of New York Mellon, which holds $675 million in bonds. Investment companies connected to Mark H. Rachesky, a billionaire who has bought distressed companies, holds the biggest part of voting securities, the filings show.

Key, an oilfield services company, had loaned a lot of money during the period of shale boom. As the oil prices fell in 2014, the company struggled to pay its debt. Last year, Key had accrued almost $1 billion in loans lasting over one year and suffered over $1 billion in losses, the regulatory filings reveal.

In June, Key started discussing structured bankruptcy with creditors. After two months, the company said that it had reached a deal with them.

The reorganization plan would swap debt into stock and grant creditors control over the business, almost eliminating existing shareholders. The biggest shareholder would be private equity firm Platinum Equity.

The company’s approach to reorganizing has become prevalent as distressed energy firms seek to leave behind debts they cannot pay back with decreasing oil prices, according to analysts. Oil prices have recovered to above $50 per barrel over the last few months.

The United States bankruptcy law gives businesses and individuals an option for restructuring their debt instead of liquidating. But if a debtor has no hope for reorganization, a San Antonio Chapter 7 Attorney can help them with liquidation.

 

 

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