Goodrich Petroleum Plans Bankruptcy Filing

Oil and gas company plans to file a so-called prepackaged bankruptcy plan by April 15

By Patrick Fitzgerald April 1, 2016 4:52 p.m. ET

Goodrich Petroleum Corp. said Friday that it plans to file for bankruptcy protection in the coming weeks after reaching a deal on the terms of a debt-for-equity swap with its junior bondholders. The Houston-based oil and gas company said it plans to file a so-called prepackaged bankruptcy plan by April 15 after striking a deal with its second-lien bondholders that calls for them to swap $175 million in debt for 100% of the reorganized Goodrich. Prepackaged bankruptcies—meaning a company files for chapter 11 with an exit plan in hand that has already been approved by creditors—are favored by those companies and their creditors who wish to navigate the bankruptcy as quickly as possible and with a minimum of expense. A Goodrich representative wasn’t immediately available for comment. Under the proposed restructuring agreement outlined in a regulatory filing, senior lenders would be paid in full or have their debt reinstated. The reorganized Goodrich, which drills for crude oil and natural gas in the Tuscaloosa Marine shale formation in Louisiana and Mississippi, would emerge from the anticipated bankruptcy as a going concern with its day-to-day operations substantially intact. Last month, Goodrich said would skip more than $13 million in interest payments due to bondholders on March 15. Skipping the payments started the clock on a 30-day grace period during which Goodrich could complete a restructuring deal outside of bankruptcy. In January, the company announced the terms of its exchange offer to bondholders owed $400 million. The exchange offer was in response to “the current low commodity price environment that has had a significant, adverse impact on the company,” Goodrich said at the time. Goodrich has previously said that if its proposed deal was successful, it would cut between $213 million and $224.2 million in debt off its books as well as save between $29.8 million and $31.4 million on annual interest obligations. Earlier this year, the New York Stock Exchange suspended trading of Goodrich’s common shares and notified the company that it would seek to delist the shares in light of its “’abnormally low’ price,” according to a regulatory filing. The shares are now trading on the OTC Markets.

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LOL!  I think the "news" is that GDP was able to negotiate a "prepackaged" Chapter 11 with its creditors.  Better than an involuntary filing?  I guess it depends on what camp you're in.

I agree.  I think the TMS was a bad decision in a series of bad decisions.  GDP had problems prior to the TMS.  I think they were likely headed toward bankruptcy before the emergence of the Haynesville Shale bailed them out.

I would like to see a what was a good producing well that Goodrich was working come back online. Are their wells going into foreclosure of sorts? 

We don't know yet, Suzan.  Yesterday was decision day regarding the final proposal to shareholders to avoid bankruptcy.  I haven't seen a report on how that came out but financial analysts and energy reporters were signaling that it didn't look good for the company.  As to bankruptcy, although much depends on the judge, if Goodrich has producing wells that have been up to date with royalty payments they may continue to pay while under the authority of the court.  As I understand it, if they are more than 90 days behind in payments the decision on resuming or catching up payments is up to the court.

They plan to stiff all shareholders and other unsecured creditors:

That was a hell of a job Goodrich.

How can you tell an investor you have lost every dime they trusted you with? 

This is hardly a surprising development.  Any stockholders who have held their GDP shares to the end will have a hard time gaining my sympathy.  I look in on some of the stock chat sites from time to time and find what appears to be a majority of penny stock investors who are uninformed and/or in denial about the trajectory of a company's financial and operating condition.  My sympathy lies with the non-management employees who will loose their jobs and the lessors/royalty interests who may suffer depending on the details of the bankruptcy proceedings.  Shareholders and unsecured creditors knew or should have known the obvious risk involved with investing in GDP.

Hardly a surprising development? Right.  MY friends who are bankruptcy attorneys were quite surprised. They were expecting some nominal amount to be set aside.

As recently as 2014, the stock was trading around $30/share, with around 78 million shares outstanding.

The money lost, by US citizens, is staggering. 

I can't believe the Goodrich boys want to stay in business.  In the future, their talents should be reserved for questions, no more complicated, than whether or not the person standing in front of them "wants fries" with that.

Only in the oil & gas business.  How much money do the Goodrich boys think they should be allowed to lose before they are discredited as incompetent idiots?

I don't buy any of their lame excuses.  Their numbers and business plan was destined for failure from day one.  I believe they knew it too.  They moved forward for the opportunity to skim the top before the bottom fell out. The whole Goodrich executive suite should be in handcuffs, getting ready to do serious time in Angola.

It was good for a while and then the balloon popped.  And lots of good people got hurt.


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