Joel R. Glucksman
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Swift Energy files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: February 11, 2016
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Swift Energy files Chapter 11
Recently, Swift Energy, the large-scale oil and gas producer, announced that it had filed for Chapter 11 bankruptcy protection. According to The Wall Street Journal, the company became just the latest casualty of the collapse of oil prices in 2015. As part of its bankruptcy petition, the company will sell off a portion of its remaining assets, but it reached an agreement with bondholders to refinance its operations.
The oil giant’s debt load drives it to insolvency
In bankruptcy documents, the company and its eight subsidiaries cited record losses as the result of the historic decline in oil prices. According to Fuel Fix, Swift Energy was driven into insolvency after it accrued a debt total of close to $1.2 billion with only $1 billion in assets.
Following the company’s grace period from its December interest payments with bondholders, Swift Energy announced that its offshore operations as well as its onshore wells in Louisiana and Texas had amassed $50 million in trade debt. According to the Journal, the company was forced to sell off a 75 percent stake in its wells in Louisiana to Texegy LLC below market value. Even so, it still could not afford its December interest payments.
Its financial struggles culminated when trading in its common stock was suspended on the New York Stock Exchange Dec. 18. Petro Global News reported that it will eventually be delisted due to “abnormally low” share prices.
Swift Energy’s reorganization plan
As part of its restructuring proposal, the company will conduct a debt-for-equity exchange with senior bondholders. The Journal reported that this deal will swap Swift Energy’s $905 million bond debt for control over its operations. It also calls for a 4 percent equity allocation for existing shareholders in the company after it emerges from bankruptcy. These shareholders will also receive warrants valued at up to 30 percent of the post-petition equity that can be exercised if the company achieves benchmarks listed in the agreement.
The company has also secured up to $75 million in debtor-in-possession financing from its senior bondholders to support its current operations and ensure that it can make royalty and interest payments to creditors. In turn, Swift Energy also negotiated a $330 million pre-petition deal with secured lenders to provide it with a credit facility in its reorganization.
Upon court approval of its bankruptcy plan, the company plans to emerge from the reorganization as a viable business.
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.
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Swift Energy files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Swift Energy files Chapter 11
Recently, Swift Energy, the large-scale oil and gas producer, announced that it had filed for Chapter 11 bankruptcy protection. According to The Wall Street Journal, the company became just the latest casualty of the collapse of oil prices in 2015. As part of its bankruptcy petition, the company will sell off a portion of its remaining assets, but it reached an agreement with bondholders to refinance its operations.
The oil giant’s debt load drives it to insolvency
In bankruptcy documents, the company and its eight subsidiaries cited record losses as the result of the historic decline in oil prices. According to Fuel Fix, Swift Energy was driven into insolvency after it accrued a debt total of close to $1.2 billion with only $1 billion in assets.
Following the company’s grace period from its December interest payments with bondholders, Swift Energy announced that its offshore operations as well as its onshore wells in Louisiana and Texas had amassed $50 million in trade debt. According to the Journal, the company was forced to sell off a 75 percent stake in its wells in Louisiana to Texegy LLC below market value. Even so, it still could not afford its December interest payments.
Its financial struggles culminated when trading in its common stock was suspended on the New York Stock Exchange Dec. 18. Petro Global News reported that it will eventually be delisted due to “abnormally low” share prices.
Swift Energy’s reorganization plan
As part of its restructuring proposal, the company will conduct a debt-for-equity exchange with senior bondholders. The Journal reported that this deal will swap Swift Energy’s $905 million bond debt for control over its operations. It also calls for a 4 percent equity allocation for existing shareholders in the company after it emerges from bankruptcy. These shareholders will also receive warrants valued at up to 30 percent of the post-petition equity that can be exercised if the company achieves benchmarks listed in the agreement.
The company has also secured up to $75 million in debtor-in-possession financing from its senior bondholders to support its current operations and ensure that it can make royalty and interest payments to creditors. In turn, Swift Energy also negotiated a $330 million pre-petition deal with secured lenders to provide it with a credit facility in its reorganization.
Upon court approval of its bankruptcy plan, the company plans to emerge from the reorganization as a viable business.
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.