ION Geophysical’s plan confirmation hearing pushed back again

By Sarah Lizee

Olympia, Wash., Aug. 1 – ION Geophysical Corp.’s hearing on its pre-packaged Chapter 11 plan was moved again, this time to Aug. 8 from to Aug. 1, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said it needs more time to resolve objections to the plan.

As previously reported, after three months of active marketing for the company’s assets that yielded no actionable bids at high enough price levels, the company and its advisers began preparing for a potential bankruptcy filing and began negotiations with key stakeholders, including an informal group of holders of 9 1/8% second-lien notes.

To facilitate continued discussions, help ION preserve liquidity and continue a forbearance period, some members of the informal noteholder group purchased all outstanding loans under the company’s $15.6 million first-lien revolver from PNC Bank, NA on March 7.

The debtors ultimately negotiated a comprehensive restructuring transaction with the informal noteholder group, under which the lenders agreed to provide the debtors with a $2.5 million debtor-in-possession facility and continued access to cash collateral.

The Chapter 11 plan includes a sale toggle feature allowing for potential sales to third parties supported by the lenders.

ION has three primary business lines: exploration and production technology & services (EPTS); software; and devices. One or more of the business lines may be sold under the sale process with any remaining assets reorganized under the plan.

In the event all assets are sold, the debtors won’t move forward with the plan of reorganization.

The company recently announced five winning bidders for its assets.

Creditor treatment

To the extent the prepetition claims under the revolver are not paid in full in cash, holders will convert their remaining claims into an exit facility.

Second-lien note claimholders will convert their claims into 99.75% of the equity of the reorganized company, subject to dilution on account of the management incentive plan.

Each holder of a general unsecured claim will receive its pro rata share of a $125,000 recovery pool.

Each holder of prepetition common stock issued by ION Geophysical will receive its pro rata share of and interests in 0.25% of the equity of the reorganized debtors, subject to dilution on account of the management incentive plan.

All prepetition preferred stock issued by ION Geophysical will be canceled.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims or reinstatement of their claims.

Intercompany claims will be reinstated or canceled without any distribution.

Administrative claims, other priority claims and priority tax claims will be paid in full.

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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