A Texas corporation which provides collected seismic data to oil and gas companies filed a Chapter 11 bankruptcy action in March. The company, Global Geophysical Services, Inc., has released statements indicating it hopes to reorganize and shift much of its operations to clients overseas suggesting the American market for its services has become overly competitive. Recently it has shifted many of its operations to Brazil and Dubai.
The company had taken measures to address its inadequate profitability as it reduced the number of its employees by about 35 percent. Further it began to require companies seeking its services to pay a greater amount of its fee upfront before commencing a project. This measure, prudent on its face, may have actually contributed to the necessity of filing Chapter 11 by unwittingly pushing potential clients to seek similar services from its competitors.
With almost a half billion dollars in both assets and debt respectively, Global Geophysical Services is considering selling some of its assets or merging with another company to improve its position. During the course of the bankruptcy, the company claims it needs approximately $60 million in debt to maintain its operations until the reorganization is complete. A motion to approve such debt which lenders can offer at much better rates of return than those pre-bankruptcy creditors, who will have to take a “haircut” as a result of the company’s bankruptcy filing, is pending before the bankruptcy court. Such debt falls within the category of administrative expenses which are necessary to preserve the estate until the reorganization is complete.
Considering the oil and gas industry is seeing 7-9% growth in the United States annually, this bankruptcy shows that commercial growth in a particular sector does not, in and of itself, guarantee a related service-provider, profitability.
In Albuquerque, Giddens & Gatton Law, PC has attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, PC at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.