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Pioneer Energy Services Corp. has won court approval for a modified chapter 11 exit plan after plummeting oil prices forced the company’s lenders and bondholders back to the bargaining table to renegotiate their “prepackaged” restructuring deal, WSJ Pro Bankruptcy reported. Bankruptcy Judge David Jones signed off on the new plan at a hearing on Monday in U.S. Bankruptcy Court in Houston. Under the modified restructuring deal, a group of Pioneer’s term lenders will receive half of the equity earmarked for bondholders under the company’s original prepack. In return, those lenders will buy a portion of convertible bonds issued by the reorganized Pioneer from the bondholders. Specifically, the lender group will buy $45.9 million of the $65.2 million in convertible bonds from the bondholders. The lenders will also purchase $75 million of the $78.1 million in newly issued Pioneer secured bonds from the bondholders. In addition, the bondholders will pay a $16 million transaction fee to lenders, with $1 million of that amount going to Pioneer.

As the coronavirus pandemic forces a shutdown of the economy, many good companies facing massive revenue declines will need to avail themselves of bankruptcy. It is critical in today’s Covid-19 world, where bankruptcy courts are inundated with cases, to allow for a streamlined chapter 11 process, according to a WSJ Pro Bankruptcy commentary. During the past 15 months, three companies — FullBeauty Brands Inc., Sungard Availability Services and Sheridan Holding Company I LLC — have confirmed their respective prepackaged chapter 11 plans within 24 hours of commencing a bankruptcy case. These “one-day bankruptcy” cases enabled the companies to fix their capital structures without any impact on vendors, customers, employees or retirees. This process should be codified, as it meets the goals of the Bankruptcy Code, eases the burden on bankruptcy courts, and is a net positive for companies, their employees and other stakeholders. Read more. 

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.