Nine Energy Service, Inc. Chapter 11 Bankruptcy Filing Summary

Nine Energy Service, Inc. (NYSE: NINE) recently made a significant announcement that will reshape its future: the company and its subsidiaries filed for Chapter 11 bankruptcy protection on February 1, 2026. This move, initiated in the U.S. Bankruptcy Court for the Southern District of Texas, aims to tackle an overwhelming debt load and reorganize operations amid tough market conditions in the oil and gas sector.

Key Developments:

• Chapter 11 Filing: On February 1, 2026, Nine Energy Service and its subsidiaries filed for "prepackaged" Chapter 11 bankruptcy. This means they had already negotiated a restructuring plan with many of their creditors before filing, aiming for a quicker and smoother reorganization process.
• DIP Financing Secured: To keep operations running during bankruptcy, the company secured up to $125 million in Debtor-in-Possession (DIP) financing. This crucial funding, which the Bankruptcy Court temporarily approved on February 3, 2026, will provide cash for employees, suppliers, and other essential vendors. Once Nine Energy exits Chapter 11, this DIP loan is expected to become a new "Exit ABL Facility" of up to $135 million, serving as the company's main credit line.
• NYSE Delisting: The New York Stock Exchange (NYSE) announced on February 2, 2026, that it would delist Nine Energy Service's common stock and immediately halted trading. The NYSE then filed the official Form 25 with the SEC on February 5, 2026, to complete the delisting. This action confirms that the company's shares no longer meet the exchange's listing requirements, a typical outcome of bankruptcy.

Why This Happened:

Nine Energy chose Chapter 11 because its substantial debt load became unmanageable, especially within the volatile and competitive oil and gas services industry. The prepackaged plan aims to legally reduce or eliminate some of these debts. This will allow Nine Energy Service to emerge with a stronger financial position and a more sustainable capital structure, setting it up for long-term survival.

Financial Impact:

The filing's main financial impact is a significant restructuring of Nine Energy's substantial debt. While the company's filing doesn't detail the exact debt figures or how much will be eliminated, the prepackaged plan aims to drastically reduce the company's debt load.

As noted, the company secured up to $125 million in Debtor-in-Possession (DIP) financing to maintain cash flow during the bankruptcy process. This DIP financing is expected to convert into a new Exit ABL Facility of up to $135 million once the company emerges from Chapter 11, becoming its primary credit line.

For existing common shareholders, the financial impact is severe. Their investment will likely become worthless or nearly worthless because common stock is typically the last to be repaid in Chapter 11 cases. The NYSE delisting further highlights this loss of value. The company's filing doesn't disclose the specific recovery rates for different creditor groups under the prepackaged plan, but the plan is designed to address their claims.

Implications for Stakeholders:

• For Existing Common Stock Investors: This is a severe blow. In Chapter 11, common shareholders are typically last in line for repayment, meaning their existing stock will almost certainly become worthless. The NYSE delisting further highlights this significant loss.
• For the Company: Chapter 11 offers a legal path to shed debt and reorganize, aiming to emerge as a leaner, more competitive business. The DIP financing is vital for keeping operations running smoothly, serving customers, and retaining employees throughout the process.
• For Creditors: Existing lenders and bondholders will see their claims restructured under the prepackaged plan. Some may incur significant losses, while others might exchange their debt for new equity in the reorganized company. The new DIP lenders have "super-priority" status, meaning their claims are at the very top of the repayment list.
• For Employees and Customers: The company plans to continue normal operations, honoring its commitments to customers and maintaining employment. The DIP financing specifically supports these ongoing activities.

What Happens Next:

Nine Energy Service will now work to secure final approval for its prepackaged reorganization plan from both the Bankruptcy Court and its creditors. If confirmed, the company will exit Chapter 11 with a new capital structure, significantly less debt, and the Exit ABL Facility in place. Existing common stock will likely trade only on the over-the-counter (OTC) market, holding minimal to no value. Any future investment in the company would involve new equity issued after bankruptcy, not the old, delisted shares.

Investor Takeaway:

For existing common stockholders, this Chapter 11 filing signals a near-total loss of investment. It's vital to understand that Chapter 11 is a formal bankruptcy process, not just a refinancing, and it almost always eliminates existing common equity. Investing in a company undergoing Chapter 11 is highly speculative and carries extreme risk. Investors should always review official company filings and seek personalized advice from financial advisors.