Offshore energy technology services company ION Geophysical Corporation on Wednesday secured temporary court approval to access a loan to fund operations during its bankruptcy.
U.S. Bankruptcy Judge Marvin Isgur in Houston approved on an interim basis ION's request to tap a $2.5 million loan during its first court hearing since filing for Chapter 11 protection on Tuesday.
Isgur will consider the final approval of the loan on May 9. The Houston-based publicly traded company, which has $139 million in debt, has lined up a prearranged restructuring strategy that allows it to either explore asset sales or reorganize by putting a group of junior creditors in control of the company and paying senior lenders in full.
ION, which provides seismic imaging and data services to offshore energy companies, blamed the lingering effects of the decline in energy prices caused by the COVID-19 pandemic for its financial troubles. Though prices improved in 2021, ION’s revenues continued to decline, which it said was due in part to energy companies continuing to rein in spending.
ION reported $118 million in revenue for 2021. It employs 182 people, down about 45% since early 2020. The proposed plan is supported by all of the company’s senior lenders, which are owed about $15.6 million, and 80% of a junior group of creditors that are owed about $116.2 million.
The company received a $6.9 million loan under the federal government’s Paycheck Protection Program, which was designed to aid small businesses during the first year of the COVID-19 pandemic. The loan was forgiven in June 2021, according to court papers.
The case is In re ION Geophysical Corporation, U.S. Bankruptcy Court, Southern District of Texas, No. 22-30987.
For ION: Daniel McGuire, Timothy Walsh, Katherine Preston and Laura Krucks of Winston & Strawn
For ad hoc group of first lien lenders and second lien noteholders: Ryan Preston Dahl, Matt Roose, Uchechi Egeonuigwe and Katharine Scott of Ropes & Gray
(Reuters - By Maria Chutchian)