The ongoing energy bust has claimed two more victims in Houston-based Key Energy Services Inc. and Fort Worth-based Basic Energy Services Inc., both of which filed for Chapter 11 protection this week in Delaware.
Basic Energy, an oilfield service company, has turned to Weil, Gotshal & Manges and Delaware’s Richards, Layton & Finger to handle a Chapter 11 case it filed Tuesday. The debtor is seeking to get a prepackaged reorganization plan approved so it can emerge from bankruptcy by year’s end.
The American Lawyer reported earlier this year on Weil and Kirkland & Ellis divvying up assignments on several notable energy bankruptcies. Ray Schrock, co-chair of the business finance and restructuring department at Weil, which he joined in 2014 after leaving Kirkland, has filed an application for employment in the Basic Energy case.
Weil said it has been paid nearly $6.57 million from Basic Energy in the year prior to its bankruptcy —the firm was formally engaged in March—and it has also received a $1.25 million retainer for its services to the company in its Chapter 11 case. In its bankruptcy petition, the oil and gas well operator lists nearly $1.08 billion in assets against $1.14 billion in liabilities.
Fried, Frank, Harris, Shriver & Jacobson is advising an ad hoc group of Basic Energy noteholders, while Davis Polk & Wardwell is representing secured term loan lenders. Vinson & Elkins is counseling asset-based lenders to the debtor. On its website, Basic Energy lists Andrews Kurth as its outside legal counsel. The firm has not yet filed an appearance in the company’s Chapter 11 case. Antonio Garza Jr., a former U.S. ambassador to Mexico now serving as counsel in White & Case’s Mexico City office, is an independent member of Basic Energy’s board of directors.
Key Energy lists $1.1 billion in assets against $1.2 billion in liabilities in its Monday bankruptcy filing in Delaware. The Houston-based oil well services provider’s proposed restructuring plan seeks to cut the company’s debt to $250 million, a process that will wipe out current shareholders and see Beverly Hills, California-based Platinum Equity LLC become its largest shareholder.
Key Energy, which like many U.S. energy companies expanded rapidly during the oil and gas boom, made headlines this summer for cutting a $5 million deal with the U.S. Securities and Exchange Commission to settle bribery allegations in Mexico.
Key Energy’s longtime general counsel Kimberly Frye and chief compliance officer J. Garrett Cornelison, a former Baker & Hostetler partner hired by the company in late 2014, left over the past year as part of a corporate reorganization spurred by an internal investigation to reshape compliance efforts, as noted by sibling publication Corporate Counsel. Key Energy promoted associate general counsel Katherine “Katie” Hargis to chief legal officer and corporate secretary on Jan. 1, 2016.
Hargis said that Wilmer Cutler Pickering Hale and Dorr represented Key Energy in the SEC’s inquiry under the Foreign Corrupt Practices Act, while Sidley Austin served as counsel to a special committee of the company’s board. Lynn Coleman, a former general counsel at the U.S. Department of Energy and retired partner at Skadden, Arps, Slate, Meagher & Flom, where she founded the firm’s energy practice, is a member of Key Energy’s board, as is Robert Reeves, general counsel and chief administrative officer at energy giant Anadarko Petroleum Corp.
Sidley, which has not yet filed billing statements with the bankruptcy court, is working with Delaware’s Young Conaway Stargatt & Taylor as bankruptcy counsel to Key Energy. The company, hit hard by falling commodities prices that inhibited its ability to keep up with its loan obligations, is merely the latest in a series of oil and gas companies to go bust this year. In August, Key Energy announced that it had agreed with creditors on a prepackaged bankruptcy filing.
More than 100 oil and gas companies in the U.S. and Canada have filed for bankruptcy since early 2015, according to Haynes and Boone, which has closely tracked the North American energy industry’s financial troubles.