Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Key Energy Services Plans to File for Chapter 11 Bankruptcy Protection

Author: Joel R. Glucksman

Date: September 30, 2016

Key Contacts

Back

Recently, Key Energy Services, one of the largest onshore rig-based well-servicing contractors in the U.S., announced that it will plan to file for Chapter 11 bankruptcy protection. According to a Fuel Fix report, the company’s creditors have agreed to a reorganization plan where debtholders will take control of the firm as part of a debt-for-equity exchange to cut liabilities from $725 million to $250 million.

Key Energy Services’ debt loan mounts

The company’s financial struggles began with the collapse of oil prices that started in 2014. Key Energy Services had agreed to several loan agreements while sales of shale oil were high, but fell into insolvency by the end of last year. In fact, Fuel Fix reported that Key Energy had $1 billion in debt along with $1 billion in operating losses in 2015. According to Bloomberg, its troubles continued into this year as Key listed revenues of $95 million in the second quarter, down from $197.5 million the same time in 2015.

As a result, the company began negotiations with creditors in June on a pre-packaged bankruptcy agreement.

Key Energy Services’ reorganization plan

The restructuring agreement calls for senior note bondholders to receive 95 percent of the newly formed company’s shares. Bloomberg reported that Key Energy’s current shareholders will see their equity stake in the company drop to 5 percent because common stock shareholders will receive 543,927 shares with the ability to purchase additional shares.

Its refinancing agreement also calls for an $85 million rights offering for common stock shares in the new company. These proceeds will be leveraged to pay down the principal and interest on the company’s current term loan. Furthermore, an asset-backed lending facility will be instituted to replace the current $100 million revolving credit facility.

In bankruptcy documents, the Key Energy Services also stated that it plans to remain a publicly traded company because it intends to emerge from the bankruptcy process as a viable business model. Throughout the process, the company will remain operational so all employees, creditors and vendors will continue to be paid.

Significance of the Key Energy Services filing

To date, over 150 oil companies in North America have filed for Chapter 11 bankruptcy protection, including more than 70 oil servicing firms. Fuel Fix reported that like its peers, Key Energy Services felt the brunt of the two-year slide in oil prices.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public post image

Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public

Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]

Author: Bryce S. Robins

Link to post with title - "Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!