ION Geophysical doesn’t need equity committee, U.S. trustee says

By Sarah Lizee

Olympia, Wash., June 29 – ION Geophysical Corp. should not have an official committee of equity holders appointed at this time, the U.S. trustee overseeing the case said in court documents filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Region 7 U.S. trustee Kevin M. Epstein said that various requests have been made for the appointment, but none have shown that a committee is necessary to adequately represent their interests.

The movants had said that because the debtors have entered into new contracts, and due to improved market conditions in the oil and gas industry, there may be “additional major value both now and in the future,” which may result in recoveries for shareholders.

But the requests did not address the absolute priority rule, which prohibits a junior class to be paid ahead of a senior class, the U.S. trustee said.

The debtors’ plan offers $125,000 to the general unsecured creditor recovery pool, leaving tens of millions of dollars in unsecured claims “out of the money.”

“Under these set of facts, it is unlikely that the value of the debtors’ assets would exceed both the secured and unsecured debt that would result in any recovery for shareholders,” Epstein said.

The U.S. trustee said the requests should be denied unless the movants can demonstrate that formation of a committee is warranted.

ION Geophysical is a Houston-based provider of geophysical technology, services and solutions for the oil and gas industry. The company filed Chapter 11 bankruptcy on April 12 under case number 22-30987.

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