Cleveland Integrity Services, a provider of inspection services to oil and gas pipelines, filed for bankruptcy on Monday, citing the impact of a decline in capital spending at midstream oil-and-gas companies that began during the COVID-19 pandemic, WSJ Pro Bankruptcy reported. Based in Cleveland, Okla., the company said in court filings that it had struggled to recover from a drying-up in capital spending at oil-and-gas companies that began in 2020. It currently has around $160 million in debt in a single term loan mostly held by Owl Rock Capital Corp., now the leading bidder to buy the company out of bankruptcy, according to court papers and public filings. Owl Rock has offered to forgive $30 million in debt to acquire the business, which is owned by private-equity firm First Reserve Corp. Any restructuring deal would require bankruptcy court approval to take effect and could be subject to competing bids. Despite the rebound in energy prices since Russia’s invasion of Ukraine last year, Cleveland Integrity’s customer spending and demand haven’t returned to their pre-2020 levels, Matt Kesner, the company’s chief operating officer, said in a declaration to the U.S. Bankruptcy Court in Houston. The company has also faced a number of lawsuits that allege it underpaid its pipeline inspectors, some of which have been settled out of court. The increase in litigation-related costs hit the company at the same time it was coping with a decline in its business, according to court papers.
