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Three oil and gas companies reached deals with creditors to quickly slash hundreds of millions of dollars of debt in chapter 11 so that they will be ready when energy prices recover, the Wall Street Journal reported today. Houston-based oil-well servicer Key Energy Services Inc. yesterday filed for chapter 11 protection, and Basic Energy Services Inc. of Fort Worth, also an oil-well servicer, said it would do so by today. Meanwhile, oil and gas producer Stone Energy Corp. said that continuing negotiations has yielded a plan to file for chapter 11 protection by Dec. 9 to finalize a restructuring deal. To confront the aftershocks of the commodities rout, they are filing pre-packaged chapter 11 bankruptcies. John Penn, a Dallas-based restructuring partner at Perkins Coie LLP who isn’t involved in these cases, said that pre-packaged bankruptcies can be especially helpful to oil and gas servicers whose survival depends on reassuring customers that they will remain viable business partners. Companies that have recently taken advantage of the ability to file a prepackaged bankruptcy include Global Geophysical Services LLC, a seismic-data provider for the oil industry, which was in and out of chapter 11 protection in two months. Oil and gas producers Atlas Resource Partners LP and Halcón Resources Corp. filed prepackaged bankruptcies on July 27; Atlas emerged from chapter 11 on Sept. 1, and Halcón followed on Sept. 9. Key Energy’s restructuring plan proposes to cut its $1 billion in liabilities to about $250 million so the roughly 2,900-employee company can emerge from chapter 11 with a “manageable debt load.” Read more. (Subscription required.) 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

Dick's Sporting Goods Inc., teamed up with liquidators, won a bankruptcy auction for the U.S. business of Golfsmith International Holdings Inc. with a bid of about $70 million, Reuters reported on Friday. Dick's plans to keep open at least 30 Golfsmith stores and wind down the rest with liquidators from Hilco Global and Tiger Capital Group. It plans to keep about 500 of the company's employees. Golfsmith had 109 stores in the U.S. at the time of its bankruptcy filing last month, and has been closing stores since then. With the bid, Dick's, the largest U.S. sporting goods retailer, also won Golfsmith's intellectual property and inventory, though the outcome of the auction still has to be approved by a bankruptcy court judge. Read more.

The trend of liquidation, rather than reorganization, for large retail debtors is likely to continue, according to an article in the October ABI Journal. Click here to read the cover article. 

Nearly 70 U.S. oil and gas companies have filed for bankruptcy in 2015 and 2016, and they now produce the equivalent of about 1 million barrels a day. This is about the same as before they declared bankruptcy, according to Wood Mackenzie, representing about 5 percent of U.S. oil-and-gas output, the Wall Street Journal reported today. That resilience has kept energy inventories flush and prices capped. Oil shot to $50 a barrel this summer, but has had trouble making much progress beyond that mark. The long-term decline in prices has led to the bankruptcies, but also to massive cost-cutting that helped producers keep mines and wells profitable. Peabody Energy Corp., Arch Coal Inc. and Alpha Natural Resources Inc. — three of the five largest U.S. coal miners — have all filed for bankruptcy in the past 18 months. They accounted for about 36 percent of U.S. coal supply in the first half of 2015. This year, production declined only in line with the rest of the sector, and their share for the first six months was nearly unchanged at about 33 percent, according to IHS Global Energy. Arch Coal and Alpha Natural Resources recently emerged from bankruptcy. Read more. (Subscription required.) 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

Unsecured creditors unhappy with Cosi Inc.’s auction proposal pushed the flatbread sandwich chain’s lead bidder to increase its offer and won extra time for rival bidders to enter the fray, the Wall Street Journal reported today. Bankruptcy Judge Melvin Hoffman of the U.S. Bankruptcy Court in Boston yesterday said that Cosi could officially put itself up for sale after hearing that hedge fund AB Value Management LLC and Ohio investment firm Milfam LLC will now start the bidding for the casual dining chain at $10 million instead of $6.8 million. They also will take on about $1.6 million in gift-card liabilities, the bidders’ attorney, William Baldiga, said yesterday. The increased stalking-horse offer, as well as a bid deadline that is two weeks later than what Cosi had originally proposed, is the result of negotiations with unsecured creditors who had expressed concerns with the company’s original sale proposal. A federal bankruptcy watchdog also had objected, calling the process “unfair” to rival bidders.

South Korea’s STX Offshore & Shipbuilding Co. filed for bankruptcy protection in Texas in a bid to stop creditors from trying to seize its assets in the U.S. as the troubled shipyard looks to sell its business overseas, the Wall Street Journal reported today. Bankruptcy Judge Jeff Bohm granted STX a temporary restraining order to block creditors from seizing U.S. assets at a hearing yesterday, one day after Yoon Keun Jang, the administrator overseeing STX Offshore’s Korean bankruptcy case, placed the company into chapter 15. Jang said that some creditors who hired STX to build vessels are trying to circumvent the Korean proceeding by seizing STX’s assets in the U.S. The shipbuilder would “suffer irreparable harm,” he said in court papers, absent a court order barring the asset seizures.

Shares of Stone Energy Corp. lost half their value in premarket trade today after the oil and gas company announced a restructuring support agreement (RSA) with certain convertible noteholders as the company prepares for a bankruptcy filing, according to marketwatch.com. The RSA contemplates that the company will file for chapter 11 on or before Dec. 9, the company said yesterday. "The execution of the RSA is the culmination of months of hard work to right-size our balance sheet in response to a sustained period of low oil and natural gas commodity prices," said Chief Executive David Welch. Read more. 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

A plan to wind down the estate of former Silicon Valley startup Jumio Inc. won final approval from a bankruptcy judge, bringing the contentious chapter 11 case nearer to a close, the Wall Street Journal reported today. Following a hearing on Wednesday, Bankruptcy Judge Brendan Shannon said that he would sign off on the identity-verification company’s debt-payment plan, overruling opposition from its former chief executive as well as some shareholders. The ruling represents a victory for early Jumio backers, such as venture-capital firm Andreessen Horowitz and Facebook co-founder Eduardo Saverin, who fought allegations that they had worked to rig the bankruptcy to their advantage. At the center of the plan is a settlement reached earlier this year that was backed by Saverin and Andreessen, as well as a committee representing shareholders. When it takes effect, the plan will largely shield Saverin and Andreessen from future lawsuits tied to the bankruptcy, although some shareholders retain the right to sue Saverin and others. One shareholder lawsuit against Saverin is already pending.

Digital design and engineering firm Aricent Holdings Luxembourg is angling to buy child-locator-technology company FilipTechnologies Inc. out of bankruptcy, the Wall Street Journal reported today. If successful as the stalking-horse bidder in Filip’s bankruptcy auction, Aricent will acquire Filip’s intellectual property, databases and proprietary software for $475,000 in cash plus liabilities, according to bankruptcy court papers filed yesterday. Filip creates colorful child-appropriate wristband phones and tracking devices that keep parents informed of their children’s whereabouts. The system incorporates an emergency alert that notifies parents if their child has left a designated safe zone. The company is named for founder Sten Kirkbak’s son, who wandered off in a crowded shopping mall when he was 3 years old, according to the company’s website.