v3.26.1
Emergence from Bankruptcy
 3 Months Ended
Mar. 31, 2026
Reorganizations [Abstract]  
Emergence from Bankruptcy Emergence from Bankruptcy
On February 1, 2026, the Company Parties filed the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court to implement a prepackaged Chapter 11 plan of reorganization. The Chapter 11 Cases were jointly administered for administrative purposes only under the caption In re Nine Energy Service, Inc. et al. On March 4, 2026, the Bankruptcy Court entered an order confirming the Plan, and on March 5, 2026, the Plan became effective in accordance with its terms and the Company Parties emerged from bankruptcy. For additional information, see “Bankruptcy Proceedings and Emergence from Bankruptcy” under Note 1 – Company and Organization.
Summary Debt Disclosures
On February 3, 2026, the Company Parties entered into a senior secured super-priority asset-based debtor-in-possession loan and security agreement (the “DIP Loan and Security Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto (the “DIP Lenders”), which provided the Company Parties with a senior secured super-priority asset-based debtor-in-possession credit facility consisting of $125.0 million in aggregate principal amount of revolving credit commitments (the “DIP ABL Facility”), including a roll-up or refinancing of all obligations under the Prepetition ABL Loan and Security Agreement.
On the Plan Effective Date, pursuant to the Plan, the Company entered into a loan and security agreement (the “Exit Loan and Security Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto, and on the terms and subject to the conditions set forth therein, each DIP Lender exchanged and converted on a cashless basis all of its loans under the DIP Loan and Security Agreement for loans under the Exit Loan and Security Agreement.
The Exit Loan and Security Agreement provides for a first priority senior secured asset-based revolving credit facility consisting of $135.0 million in aggregate principal amount of revolving credit commitments (the “Exit ABL Facility”). A portion of the Exit ABL Facility not in excess of $5.0 million is available for the issuance of standby letters of credit. The Company Parties’ obligations under the Exit ABL Facility are secured by a first-priority security interest in substantially all of their tangible and intangible assets, including all machinery and equipment, and are guaranteed by certain of the Company’s existing and future domestic and Canadian subsidiaries.
For additional information, see Note 9 – Debt Obligations.
Reorganization Items, Net
In accordance with ASC 852, any incremental expenses, gains, and losses that are realized or incurred as of or subsequent to the Petition Date that are a direct result of the Chapter 11 Cases are reported as “Reorganization Items, net”. The following table summarizes the components of reorganization items included in the Company’s Condensed Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss):
Predecessor
Period from January 1, 2026 through March 5, 2026
(in thousands)
Gain on liabilities subject to compromise$184,296 
Write-off of deferred financing costs(24,243)
Fresh start adjustments(17,429)
Fees related to the DIP ABL Facility(2,567)
Success fees(5,440)
Other professional fees(8,977)
Write-off of stock-based compensation(1,581)
Reorganization items, net$124,059 
Cash payments for reorganization items, net$3,820 
Liabilities Subject to Compromise
From the Petition Date through the Plan Effective Date, the Company Parties operated their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As such, in accordance with ASC 852, the Company recorded prepetition unsecured and under-secured obligations that may be impacted by the Chapter 11 filing as “Liabilities subject to compromise” in its Condensed Consolidated Balance Sheet prior to the Plan Effective Date. The Company evaluated and adjusted the amount and classification of its prepetition liabilities through the Plan Effective Date, as applicable.
Fresh Start Accounting
In connection with its emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and was required to apply fresh start accounting on the Plan Effective Date. The Company was required to apply fresh start accounting because (i) holders of existing voting shares of the Company prior to its emergence received less than 50% of the voting shares of the Company outstanding following its emergence from bankruptcy and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan of approximately $320.7 million was less than the post-petition liabilities and allowed claims of approximately $497.4 million.
In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820-Fair Value Measurements and FASB ASC Topic 805-Business Combinations. Accordingly, the condensed consolidated financial statements after March 5, 2026 are not comparable with the condensed consolidated financial statements as of or prior to that date. The Plan Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor. Upon emergence from bankruptcy, the Company re-established its previously existing accounting policies unless otherwise noted.
Reorganization Value
The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement relating to the Plan, the enterprise value of the Successor was between $185.0 million and $240.0 million. With the assistance of third-party valuation advisors, the Company determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, which included (i) a selected publicly traded companies analysis, (ii) a selected transactions analysis, and (iii) a discounted cash flow analysis under the income approach using a discount rate ranging from 11.0% to 15.0% over three years, and adjusted EBITDA multiples ranging from 3.75x to 4.75x to estimate terminal value. For GAAP purposes, the Company valued the Successor’s individual assets, liabilities, and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $212.5 million.
The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in the Company’s valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations, and financial projections, including the fair value adjustments, the financial projections, the enterprise value, and the equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company’s control. Accordingly, the Company cannot provide assurance that the estimates, assumptions, valuations, or financial projections will be realized, and actual results could vary materially.
The following table reconciles the enterprise value to the reorganization value as of the Plan Effective Date:
March 5, 2026
(in thousands)
Enterprise value$212,500 
Plus: Cash and cash equivalents17,824 
Plus: Non-interest bearing current liabilities71,875 
Plus: Non-interest bearing long-term liabilities18,476 
Reorganization value of Successor assets$320,675 
Condensed Consolidated Balance Sheet
The following condensed consolidated balance sheet is as of March 5, 2026. This condensed consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Plan Effective Date. The explanatory notes following the table below provided further details on the adjustments, including the assumptions and methods used to determine fair value of its assets and liabilities.
PredecessorReorganization AdjustmentsFresh Start AdjustmentsSuccessor
(in thousands)
Assets  
Current assets  
Cash and cash equivalents$23,038 $(5,214)(a)$— $17,824 
Restricted cash1,475 9,141 (b)— 10,616 
Accounts receivable, net79,124 — — 79,124 
Inventories, net52,134 — (1,734)(j)50,400 
Prepaid expenses12,145 — — 12,145 
Other current assets2,044 — — 2,044 
Total current assets169,960 3,927 (1,734)172,153 
Property and equipment, net61,994 — 45,505 (k)107,499 
Operating lease right of use assets, net32,034 — (773)(l)31,261 
Finance lease right of use assets, net72 — (17)(m)55 
Intangible assets, net66,079 — (56,908)(n)9,171 
Other long-term assets808 — (272)(o)536 
Total assets$330,947 $3,927 $(14,199)$320,675 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable$39,070 $— $— $39,070 
Accrued expenses19,015 1,630 (c)— 20,645 
Income taxes payable465 — — 465 
Current portion of long-term debt4,760 — — 4,760 
Current portion of operating lease obligations292 13,020 (d)(1,617)(p)11,695 
Current portion of finance lease obligations— 55 (d)— 55 
Total current liabilities63,602 14,705 (1,617)76,690 
Long-term liabilities
Long-term debt82,568 7,737 (e)— 90,305 
Long-term operating lease obligations973 17,598 (d)(182)(p)18,389 
Other long-term liabilities87 — — 87 
Liabilities subject to compromise350,173 (350,173)(f)— — 
Total liabilities497,403 (310,133)(1,799)185,471 
Commitments and contingencies (Note 11)
Stockholders’ equity (deficit)
Predecessor common stock433 (433)(g)— — 
Successor common stock— 139 (h)— 139 
Predecessor additional paid-in capital808,741 (808,741)(g)— — 
Successor additional paid-in capital— 135,065 (h)— 135,065 
Accumulated other comprehensive loss(5,029)— 5,029 (q)— 
Accumulated deficit(970,601)988,030 (i)(17,429)(r)— 
Total stockholders’ equity (deficit)(166,456)314,060 (12,400)135,204 
Total liabilities and stockholders’ equity (deficit)$330,947 $3,927 $(14,199)$320,675 
Reorganization Adjustments
(a)    Reflects the change in cash and cash equivalents for the following activities:
(in thousands)
Proceeds from Exit ABL Facility$89,479 
Payment of outstanding borrowings under the DIP ABL Facility(82,568)
Payment of non-retained professional fees(2,828)
Funding of the professional fees escrow account(9,221)
Payment of restructuring expenses(156)
Transfer of cash and cash equivalents from restricted cash80 
Change in cash and cash equivalents$(5,214)
(b)    Reflects the change in restricted cash for the following activities:
(in thousands)
Funding of the professional fees escrow account$9,221 
Transfer of restricted cash to cash and cash equivalents(80)
Change in restricted cash$9,141 
(c)    Reflects the change in accrued liabilities for the following activities:
(in thousands)
Accrual of professional service success fees$3,440 
Payment of non-retained professional fees(828)
Reclassification of professional fees to borrowings under the Exit ABL Facility(826)
Payment of restructuring expenses(156)
Change in accrued liabilities$1,630 
(d)    Reflects the reinstatement of operating and finance lease obligations of $30.7 million from liabilities subject to compromise.
(e)    Reflects the change in long-term debt for the following activities:
(in thousands)
Borrowings drawn on Exit ABL Facility$89,479 
Record professional fees related to the Exit ABL Facility826 
Payment of outstanding borrowings under the DIP ABL Facility(82,568)
Total change in long-term debt$7,737 
(f)    Liabilities subject to compromise settled or reinstated in accordance with the Plan and the resulting gain were determined as follows:
(in thousands)
Outstanding principle on 2028 Notes$300,000 
Operating and finance lease obligations30,673 
Accrued and unpaid interest19,500 
Total liabilities subject to compromise350,173 
Reinstatement of operating and finance lease obligations(30,673)
Issuance of Successor common stock(135,204)
Gain on settlement of liabilities subject to compromise$184,296 
(g)    Reflects the cancellation of the Predecessor’s common stock of $0.4 million and the Predecessor’s additional paid-in-capital of $808.7 million.
(h)    Reflects the reorganization adjustments to common stock and additional paid-in-capital:
(in thousands)
Par value of 13.9 million shares of new common stock issued
$139 
Capital in excess of par value of 13.9 million issued and authorized shares of new common stock issued
135,065 
Total Successor equity issued on the Plan Effective Date$135,204 
(i) Reflects the reorganization adjustments to accumulated deficit:
(in thousands)
Gain on settlement of liabilities subject to compromise$184,296 
Accrual of professional services success fees(3,440)
Payment of non-retained professional fees(2,000)
Write-off of unrecognized stock-based compensation expense(1,581)
Total adjustments impacting reorganization items, net177,275 
Cancellation of Predecessor common stock and additional paid-in-capital810,755 
Net change in accumulated deficit$988,030 
Fresh Start Adjustments
Under the application of fresh start accounting and with the assistance of valuation experts, the Company conducted an analysis of the Condensed Consolidated Balance Sheet to determine if any of its net assets would require a fair value adjustment as of the Plan Effective Date. The results of the Company’s analysis indicated that its principal assets, which include property and equipment, inventory, leases, and certain intangible assets at emergence would require a fair value adjustment on the Plan Effective Date. The rest of the Company’s net assets were determined to have carrying values that approximated fair value on the Plan Effective Date with the exception of certain other assets and liabilities that were written off. Further details are described below.
(j)    Prior to the Plan Effective Date, the Company capitalized certain running gear associated with its Tools business based on the expected resale of the item to customers. With the adoption of fresh start accounting, the Company has elected to expense running gear as rental equipment and no longer considers the items to primarily be available for resale. As a result of this change in accounting policy, the Company wrote off approximately $2.3 million of running gear as a reorganization item. The remaining Level 3 fair value was determined by a combination of the market approach (comparable sales method for finished goods) and cost approach (replacement cost for raw materials) which resulted in an increased fair value of $0.6 million. Significant inputs utilized in determining fair value included, but was not limited to, estimates of selling price, profit allowance and holding costs, which the Company believes are reasonable and appropriate.
(k)    Reflects the fair value adjustment of $45.5 million to property and equipment, net due to the Company’s adoption of fresh start accounting. The Level 3 fair value of property and equipment was determined by using a combination of (1) the cost approach, which considers historical acquisition costs for these assets adjusted for inflation, as well as factors in any potential obsolescence based on the current condition of the assets and 2) the market approach, which considers the sales of similar or substitute assets and related market data and establishes a value estimate by processes involving comparison.
(l)    Reflects the $2.2 million decrease to operating lease right-of-use assets due to the remeasurement under fresh start accounting using the Company’s incremental borrowing rate (7.2%) based on the corresponding terms at the Plan Effective Date. The decrease was offset by a $1.4 million increase in operating lease right-of-use assets to recognize leasehold interests associated with favorable lease contracts under the income approach. Significant inputs utilized in determining the fair value included, but was not limited to, estimates of discount rates and market rental rates, which the Company believes are reasonable and appropriate. Discount rates ranged from 9.0% to 9.75%.
(m)    Reflects the remeasurement of finance lease right-of-use assets to the corresponding finance lease obligations due to the Company’s adoption of fresh start accounting.
(n)    Reflects the fair value adjustment of $56.9 million to intangible assets, net due to the Company’s adoption of fresh start accounting. For additional information, see Note 7 – Intangible Assets.
(in thousands)
Adjustment to write-off capitalized costs and related accumulated amortization of intangible assets, net as part of fresh start accounting$(66,079)
Recognition of intangible assets, net recorded at fair value (See Note 7 – Intangible Assets)
9,171 
$(56,908)
(o)    Reflects the fair value adjustment of $0.3 million on an equity method investment due to the Company’s adoption of fresh start accounting.
(p)     Reflects the $1.8 million decrease to operating lease obligations due to the remeasurement under fresh start accounting using the Company’s incremental borrowing rate (7.2%) based on the corresponding terms at the Plan Effective Date.
(q)    Reflects the derecognition of $5.0 million of Predecessor accumulated other comprehensive loss through reorganization items, net.
(r)    The following table summarizes the cumulative impact of the fresh start adjustments, the elimination of the Predecessor’s accumulated other comprehensive loss, and the adjustments required to eliminate accumulated deficit:
(in thousands)
Fair value adjustment to inventories, net$(1,734)
Fair value adjustment to property and equipment, net45,505 
Fair value adjustment to operating lease right-of-use assets(773)
Fair value adjustment to finance lease right-of-use assets(17)
Fair value adjustment to intangible assets, net(56,908)
Fair value adjustment to other long-term assets(272)
Fair value adjustment to operating lease obligations1,799 
Derecognition of Predecessor accumulated other comprehensive loss(5,029)
Total fresh start adjustments impacting reorganization items, net(17,429)
Net change in accumulated deficit$(17,429)