Nine Energy Service: Prepack Equitizes Secured Notes

Nine Energy Service, Inc. and certain subsidiaries filed Chapter 11 petitions on February 1, 2026 in the U.S. Bankruptcy Court for the Southern District of Texas to implement a prepackaged plan of reorganization. The company entered into a restructuring support agreement with holders of its 13% senior secured notes due 2028 and its asset-based lending group, and the plan provides for the cancellation of existing common stock and an equitization of the secured notes. The filing is structured as a fast-track, prepackaged case and is designed to refinance the ABL facility through a new DIP and exit ABL while moving to confirmation on a tight timeline.

In a public statement, the company said it expects to emerge within roughly 45 days and to fund its operations through a committed $125 million DIP ABL facility and a planned $135 million exit ABL facility. Management stated that vendors are expected to be unimpaired and paid in full in the ordinary course, and the filing includes the company and certain U.S. and Canadian subsidiaries while leaving other operations outside the United States and Canada out of the proceedings. The case centers on a North American oilfield services provider that describes itself as a leading onshore completions business with operations across major U.S. and Canadian basins.

Debtors	Nine Energy Service, Inc. and affiliated subsidiaries (including U.S. and Canadian operating entities)
Court	U.S. Bankruptcy Court, Southern District of Texas
Case Number	26-90295 (lead case)
Petition Date	February 1, 2026
Case Type	Prepackaged Chapter 11
Headquarters	Houston, Texas
Employees	Approximately 1,100 full-time employees and about 30 contractors
Primary Funded Debt	ABL facility and senior secured notes (approximately $388 million total funded debt at filing)
DIP Facility	$125 million senior secured superpriority DIP ABL (full roll-up of prepetition ABL)
Exit Facility	$135 million exit ABL (planned at emergence)

Prepackaged Restructuring and Plan Mechanics

Capital structure at filing. The First Day Declaration indicates the capital structure at the petition date consisted of a prepetition ABL facility and senior secured notes due 2028, with total funded debt of roughly $388 million and unrestricted cash of about $5.5 million. The notes were the largest funded tranche and were trading at distressed levels prior to filing. The company also reported approximately 43.3 million shares of common stock outstanding. The balance sheet context is relevant because the prepackaged plan hinges on the conversion of the noteholder claims into new equity and a refinancing of the ABL on emergence.

RSA-backed plan mechanics. The company disclosed in an SEC filing that it entered into a restructuring support agreement on the petition date with an ad hoc group of noteholders and the ABL lender group. The plan provides that senior secured notes claims will be equitized into 100% of the new equity (subject to dilution by a management incentive plan), while existing common stock will be canceled for no recovery. The company also said the filing is intended to eliminate roughly $320 million of senior secured notes and reduce annual cash interest expense by about $40 million, with lenders and noteholders supporting the transaction and management expecting a quick confirmation process.

Class structure and estimated recoveries. The Disclosure Statement provides a straightforward class structure with most classes treated as unimpaired other than the senior secured notes and equity. The Plan of Reorganization allocates the reorganized equity to the secured notes class, with common equity and 510(b) claims receiving no recovery. The Disclosure Statement also provides valuation ranges and projected recoveries, indicating a reorganization value range of roughly $185 million to $240 million, with implied equity value in a $112 million to $167 million range after assumed net debt. The implied recoveries for noteholders are therefore based on enterprise value assumptions rather than cash proceeds.

DIP financing and exit ABL economics. The DIP Motion seeks approval for a $125 million senior secured superpriority DIP revolving facility with the prepetition ABL lenders as the primary source of liquidity during the case. The DIP includes a full roll-up of prepetition ABL obligations upon entry of an Interim DIP Order, and it carries pricing at SOFR (1.50% floor) plus 4.00%, a 0.50% unused line fee, a 1.50% arrangement fee on commitments, and a $10,000 monthly collateral monitoring fee. The DIP maturity is set at 120 days from closing, and the facility includes milestones requiring plan confirmation by mid-March 2026 and an effective date by the end of March. The debtors also intend to refinance the DIP with a $135 million exit ABL facility at emergence, as outlined in the press release announcing the prepackaged filing.

Trade creditors and vendor continuity. The Trade Claims Motion indicates that the business depends on a broad base of trade vendors and service providers. The company asked the court for authority to pay prepetition trade obligations in the ordinary course and to honor outstanding orders. The debtors estimated prepetition trade claims at approximately $39.4 million, including roughly $13.7 million of 503(b)(9) claims, $22.0 million of general unsecured trade obligations, and $3.7 million of trade-related secured claims. The prepackaged plan treats general unsecured claims as unimpaired, consistent with the company's public statement that vendors are expected to be paid in full.

Solicitation and confirmation path. The case is structured as a prepackaged filing with a combined hearing motion scheduling disclosure statement approval and confirmation for early March, and the solicitation timeline is compressed. The voting record date is January 30, 2026 and the solicitation period runs through early March, with a proposed voting deadline on March 2, 2026 and a combined hearing on March 4, 2026. The milestones embedded in the DIP require final approval and confirmation by mid-March and an effective date before the end of March. Those dates are proposed and subject to court approval, but they illustrate the case's intended pace.

Drivers of distress and rationale for the prepack. The First Day Declaration describes a set of operational and capital structure pressures that set the stage for a prepackaged restructuring. The company entered 2026 with a high-coupon secured notes stack and a borrowing base-dependent ABL, leaving limited margin for volatility in customer activity. Management pointed to sustained pricing pressure in oilfield services and swings in energy prices that affected E&P spending, which in turn reduced demand for completion services. The declaration also indicates that leverage and interest expense constrained reinvestment in equipment and technology and limited flexibility to participate in industry consolidation. Those constraints are particularly acute in completions, where fleet utilization and responsiveness to customer schedules drive margins.

The company also faced equity market stress in the year before filing. The NYSE notified Nine Energy Service in April 2025 that its average share price had fallen below the $1.00 listing threshold, beginning a cure period. By the time of the filing, the plan contemplated full cancellation of existing equity, and NYSE Regulation announced the suspension of trading and the start of delisting proceedings. The Disclosure Statement presents the prepack plan as a balance-sheet reset designed to reduce leverage, refinance the ABL, and preserve field operations and customer relationships during the solicitation and confirmation process.

First-Day Motions and Operational Continuity

The prepackaged structure still required a set of first-day motions to preserve ordinary-course operations in a business with high activity levels and a large field workforce. The debtors sought authority to pay wages, salaries, bonuses, and employee benefit obligations, continue insurance programs, pay taxes and fees as they came due, and maintain existing utility service. They also requested approval to continue their cash management system, which supports daily disbursements and receivables processing across multiple operating subsidiaries. These requests were paired with the DIP and trade claims motions to ensure continuity of vendor relationships and access to short-term liquidity during the expedited plan process.

The docket reflects interim orders for key operational requests early in the case, including the Interim DIP Order, the Interim Cash Management Order, and the Interim Trade Claims Order. Together, these orders are intended to allow the company to keep payroll and field operations uninterrupted while the solicitation and confirmation process runs on the compressed prepack timetable. The debtors also moved to appoint a claims and noticing agent to manage service of notices and maintain the claims register, which supports the plan process and creditor communications.

Business Overview and Operating Footprint

Nine Energy Service describes itself as a North American onshore completions provider focused on unconventional oil and gas wells. The company provides services that span the well completion lifecycle, including perforating and completion tools, cementing, coiled tubing, and wireline services. Its operating footprint is tied to major onshore basins in the United States and Canada, and it is headquartered in Houston with a presence in key producing regions. Public filings emphasize that the company's services are designed to support high-intensity completions where operators prioritize efficiency and productivity per lateral foot.

The company organizes its operations into four segments. The Completion Tools segment includes perforating guns and related downhole tools; Cementing provides primary cementing and related services; Coiled Tubing delivers well intervention and cleanout services; and Wireline provides both cased-hole and open-hole services. The First Day Declaration indicates the company maintains an R&D facility in Norway to support international markets, although the Chapter 11 filing excludes non-U.S. and non-Canadian operations. The prepack structure aims to preserve continuity across these segments while reducing leverage and interest expense.

The company's operating footprint spans multiple U.S. basins and Canadian regions that require rapid mobilization of equipment and personnel. Its model depends on keeping tool inventories and crews available across basins, which makes liquidity and access to equipment maintenance funding essential. The declaration indicates the company maintains an R&D facility in Norway to support international markets, but those operations are not included in the Chapter 11 filing. In its public disclosures, the company emphasizes technical expertise in high-intensity completions, a niche that requires consistent capital investment even during market downturns.

Nine Energy's customer mix is concentrated in E&P operators with large unconventional programs, and the company's services are typically tied to completion schedules that can accelerate or slow quickly. In periods of soft activity, service providers often experience pricing pressure and lower utilization, which can compress EBITDA and reduce free cash flow. The Disclosure Statement describes the restructuring as a balance-sheet reset intended to preserve customer relationships and fleet utilization while the case proceeds on a compressed timeline.

Nine Energy's customer base is concentrated in E&P operators active in unconventional basins. The company's recent public disclosures emphasize technical specialization and the need to keep service capacity ready for shifts in rig activity and completion intensity. The operations mix is linked to oil and gas pricing cycles and drilling activity, which can compress margins in downcycles and expand in periods of stronger rig counts. For a completions provider, consistent access to working capital and equipment maintenance is material, which explains the company's emphasis on rolling the ABL into a DIP and exit facility as part of the prepackaged restructuring.

Corporate Structure and Workforce

The Chapter 11 filing includes a parent holding company and operating subsidiaries in the United States and Canada. The First Day Declaration indicates the debtor group is incorporated in Delaware and includes the following entities:

The debtor group reflects the company's history of growth through acquisitions and product line expansion, with specialized subsidiaries aligned to specific completion services. The organizational structure is relevant to the plan because intercompany claims and interests are treated as separate classes, most of which are reinstated or canceled under the plan without recoveries. Non-debtor operations outside the United States and Canada are not included in the filing, consistent with the company's public statement that foreign operations outside North America are excluded.

Workforce continuity is a key issue in oilfield services restructurings. The First Day Declaration indicates the company employed approximately 1,100 full-time employees at the petition date and used about 30 independent contractors. The first-day relief sought includes payment of wages, benefits, and expense reimbursements to keep field and operating staff in place while the company continues to service customers. The company's public communications highlight an intent to remain operational through the restructuring and to preserve vendor and employee relationships during the compressed prepack timetable.

Prepetition Performance and Liquidity Signals

Public financial filings show a business that was managing leverage and working capital volatility in a cyclical sector. As of March 31, 2025, the company reported total debt of $349.3 million and cash of $17.3 million, with a stockholders' deficit of $72.1 million. By mid-2025, the company reported cash of $14.2 million and revolver availability of $51.3 million, for total liquidity of $65.5 million. The September 30, 2025 quarterly report showed cash of $14.4 million and ABL availability of $25.9 million, reflecting a reduced borrowing base as inventory appraisals and commodity price assumptions shifted.

The company refinanced its revolving credit facility in May 2025, entering into a new $125 million ABL facility with White Oak Commercial Finance as agent. The facility included a $5 million letter of credit sublimit and an accordion feature up to $50 million, and it refinanced the prior revolver that would have matured in 2027. An industry report noted the ABL closed at $125 million and extended maturity to 2028, aligning liquidity with the 2028 notes maturity. The ABL refinancing provided short-term runway, but by late 2025 the company disclosed that borrowing base reductions could constrain availability.

The ABL's structure mattered because it linked borrowing capacity to eligible receivables and inventory, exposing liquidity to commodity price-driven valuation changes. The May 2025 facility also matured on the earlier of May 1, 2028 or 91 days prior to the notes maturity, and it included an accordion feature up to $50 million, subject to lender approval. These provisions allowed some flexibility but also tied the company's liquidity to the secured notes timeline. As the notes approached maturity, the ABL's springing maturity underscored the need for a broader capital structure solution.

Operationally, the company continued to invest in its fleet. The Q2 2025 results release reported capital expenditures of $6.1 million for the quarter and $10.4 million for the first half of 2025, with full-year capex guidance maintained at $15 million to $25 million. These figures illustrate ongoing capital needs even during periods of uneven activity. Against that backdrop, the high coupon on the 2028 notes and the borrowing-base sensitivity of the ABL made the company's funding mix increasingly difficult to sustain. The September 30, 2025 quarterly report also highlighted the magnitude of the interest burden. Semiannual cash interest on the 2028 notes was approximately $19.5 million per payment period, which is meaningful relative to quarterly adjusted EBITDA. The company stated it might need to refinance or restructure its debt, raise capital, or pursue asset sales to address long-term liquidity needs, foreshadowing the prepackaged restructuring pursued in early 2026. These disclosures provide context for the plan's equitization of the secured notes and the emphasis on reducing annual interest expense.

The company's equity capital structure also faced pressure. The NYSE notified Nine Energy Service in April 2025 that it was out of compliance with the $1.00 minimum share price requirement, triggering a six-month cure period. After the Chapter 11 filing, NYSE Regulation announced it would commence delisting proceedings and suspend trading, citing the bankruptcy filing and the expected cancellation of common stock under the plan. This progression underscores the plan's treatment of equity and the role of the prepack in transitioning ownership to secured noteholders.

Market and Industry Context

Nine Energy's restructuring unfolded amid a period of uneven activity in U.S. onshore drilling and completions. In its third-quarter 2025 results release, the company reported revenue of $132.0 million and adjusted EBITDA of $9.6 million, while noting pricing pressure and a drop in the U.S. rig count from 592 at the end of the first quarter to 549 at the end of the third quarter. The company attributed the pressure to reduced customer activity in certain basins and a slower completions pace, conditions that can compress margins for service providers with fixed-cost equipment fleets and labor requirements.

For full-year 2024, Nine reported revenue of $554.1 million and adjusted EBITDA of $53.2 million. Management cited a flat average rig count and low natural gas prices that weighed on activity levels in several shale basins. The company's results show that operating performance remained positive at the EBITDA line, but the leverage profile and interest burden absorbed cash flow that might otherwise have been available for capital spending or balance sheet repair.

These data points place the prepackaged plan in the broader context of a leveraged oilfield services company attempting to reset its capital structure amid cyclical end-market demand. The plan's reduction of funded debt and the move to a new exit ABL facility are intended to provide a more flexible balance sheet in a market where rig counts and completion intensity can shift quickly. The case also highlights how high-coupon secured notes can become difficult to service when pricing pressures persist across multiple quarters.

Key Dates and Upcoming Milestones

The prepackaged restructuring includes a compressed timeline with key dates spanning late January through March 2026. The following table summarizes the main events from the refinancing of the ABL through the proposed plan effective date. Dates tied to plan confirmation and the effective date are proposed and subject to court approval.

This schedule reflects a prepackaged case that is designed to move quickly, with confirmation targeted roughly six weeks after the petition date. The timeline assumes that solicitation support levels remain intact and that the court grants final DIP approval and confirmation in March. Any delays in objections or in plan confirmation could require modifications to the DIP milestones, but the stated schedule provides a clear framework for stakeholders tracking the restructuring.

Frequently Asked Questions

When did Nine Energy Service file for chapter 11?

Nine Energy Service and certain subsidiaries filed chapter 11 petitions on February 1, 2026 in the U.S. Bankruptcy Court for the Southern District of Texas.

Where is the Nine Energy Service bankruptcy case pending, and what is the case number?

The cases are pending in the U.S. Bankruptcy Court for the Southern District of Texas, with Nine Energy Service, Inc. as the lead debtor under case number 26-90295.

What is Nine Energy Service's primary funded debt at filing?

The First Day Declaration indicates funded debt of roughly $388 million at the petition date, consisting primarily of a prepetition ABL facility and 13% senior secured notes due 2028.

What does the prepackaged plan do to the secured notes and equity?

The plan provides that holders of the 13% senior secured notes receive 100% of the reorganized equity, while existing common stock is canceled for no recovery.

What DIP and exit financing is proposed in the case?

The company disclosed a committed $125 million DIP ABL facility and a planned $135 million exit ABL facility to fund operations and refinance the prepetition ABL at emergence.

How are trade creditors treated in the restructuring?

The debtors asked for authority to pay prepetition trade claims in the ordinary course and indicated that general unsecured claims are intended to be unimpaired under the plan, consistent with the company's public statement that vendors are expected to be paid in full.

How many employees does Nine Energy Service have?

The First Day Declaration indicates the company employed approximately 1,100 full-time employees and about 30 independent contractors at the petition date.

What is the timeline for plan confirmation and the effective date?

The proposed schedule sets a voting deadline of March 2, 2026 and a combined disclosure statement approval and confirmation hearing on March 4, 2026, with milestones calling for confirmation by March 16, 2026 and a plan effective date by March 31, 2026, subject to court approval.

Who is the claims agent for Nine Energy Service?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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