Houston, Texas-based Ethos Offshore US has filed for Chapter 7 bankruptcy after acknowledging that it would not likely be able to pay its debtors. The Chapter 7 filing with the Southern District of Texas court notes that the bankruptcy process will liquidate all of the firm’s assets, and the proceeding funds will be used to pay back debts to creditors.
Ethos’ Chapter 7 filing is quite different from a Chapter 11 bankruptcy filing, which has been popular with many oil and gas companies filing for bankruptcy within the last two years. A chapter 11 bankruptcy filing allows a firm to negotiate its debt payment schedule and put forth a financial plan in order to reboot the company.
Linn Energy was one of the more notable companies that underwent a financial restructuring process under a Chapter 11 filing due to an inability to make good on their debt, and on March 14 the firm officially announced it was no longer bankrupt. However, Ethos’ Board of Directors decided that there was no possible outcome in which all creditors would be fully compensated, and, therefore, the BOD opted for the Chapter 7 filing.
Secured creditors will receive the funds that will be generated from the sale of the firm’s assets, but Ethos believes it will be unable to repay any of its unsecured creditors. The company reported having assets of a value less than $50,000, and its liabilities range from $1 million to $10 million.
The majority of bankruptcies seen in the United States over the past two years have largely originated in Texas, but the total flow of companies filing for bankruptcy has largely diminished in recent times. According to Haynes and Boones’ Oil Patch Bankruptcy Monitor, most recently updated on February 20, the total number of bankrupt oil and gas companies in Texas was 55. The state with the second highest number of bankruptcies, Delaware, experienced on 18 such bankruptcies.
Overall, the report notes that there have been 119 North American oil and gas firms that have filed for bankruptcy since 2015, and, as of February 20, only five of those firms had filed for bankruptcy in 2017. The slight increase in the oil price since the 2015 lows and the rigorous cost-cutting efforts of O&G Companies have enabled many firms to restructure their operations in order to turn a profit. The continuing effort to stay afloat is still clearly an issue, but it seems there has been a stemming of the amount of financially insolvent companies.
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
- Tim McNallyhttps://oilmanmagazine.com/author/tim-mcnally/
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