Quicksilver Resources Inc. announced that it would not to make an interest payment of approximately $13.6 million, which was due February 17, 2015, on certain notes that will be due in 2019. Quicksilver says it has a 30-day grace period before the failure to make the interest payment results in an event of default.
In its press release, Quicksilver maintained that it was in the best interests of its stakeholders to address the company's debt and capital structure. The Company also said that it intends to continue discussions with its creditors during the 30-day grace period. Most significantly, the company acknowledged that it "may need to seek voluntary protection under chapter 11 of title 11 of the U.S. Code to restructure its capital structure."
Thus far, the bankruptcies resulting from the downturn in commodity prices have primarily been in service sector and related companies. Thus, Quicksilver's announcement, while certainly not unexpected, comes as a sobering testament to the severity of the downturn, the impact it has had and will continue to have on many operators (especially those carrying substantial debt) and to the perception of many that the impact of lower prices will be felt for a long time to come.
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