NEW YORK (The Deal) -- Despite reducing what it owes Capital One Bank NA by $15 million since January, oilfield services provider Frac Specialists LLC has filed for bankruptcy with plans to restructure its prepetition debt.
The Midland, Texas, company and affiliates Acid Specialists LLC and Cement Specialists LLC submitted a Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth on Sunday, May 17. The companies requested joint administration in a motion filed the same day.
In addition to seeking joint administration, the companies want clearance to access their cash collateral so they can continue operating.
Judge D. Michael Lynn, who is presiding over the case, has yet to set any hearing dates.
According to a Sunday motion, secured lender Capital One holds a security interest on all the debtor's cash.
The debtors borrowed $25 million from the bank on Sept. 19. As of the petition date, Capital One was owed about $7 million.
In a Sunday cash collateral motion, Frac Specialists said since January, the debtors have reduced their collective secured debt with Capital One to $7 million from $22 million.
"Nevertheless, the bank insisted that the debtors pledge additional collateral to secure the indebtedness," the motion said.
"The debtors became concerned that the bank intended to offset funds in the debtors' operating accounts if the debtors did not agree to pledge additional collateral to the bank," according to the motion. "These bankruptcy cases were filed in part as a preventative measure to preserve all assets, including working capital, for the benefit of all creditors and to provide the debtors with sufficient cash reserves to successfully reorganize."