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Two Texas-based fracking sand companies — FCI Sand Operations LLC and FCI South LLC — filed for Chapter 11 bankruptcy on Wednesday, citing crushing debt, liquidity shortfalls, and disputes with their secured lender.

According to court filings, FCI Sand estimated between $100 million and $500 million in both assets and liabilities, while FCI South listed $50 million to $100 million of each. Together, they requested a joint administration of their cases.

Construction Delays and Collapsing Orders

The filings reveal that construction of a new sand processing plant slowed production just as the companies were struggling to meet customer demand. Once the plant finally came online, customer orders plunged due to a downturn in drilling activity in the Eagle Ford Shale, a 50-mile-wide, 400-mile-long formation in Texas known for producing oil and natural gas.

The combination left the companies starved of revenue and scrambling for liquidity. Efforts to raise capital by selling equity backfired, the filings said, as their lender declared the move a violation of loan agreements and threatened to enforce remedies.

Banking on New Capital

“The debtors are still left without liquidity and without means to fund their operations which, if operations cease, the debtors’ business is seriously jeopardized,” the companies wrote. The filings stress that the Chapter 11 petitions were intended to preserve value, attract new capital, and protect stakeholders.

Customers including Halliburton rely on the companies’ high-quality quartz sand, a key component in hydraulic fracturing. Despite a recent rebound in drilling and customer orders, the debtors said they lack the cash flow to sustain operations.

Postpetition Financing in Play

The secured lender represents participants with roughly $26 million in claims, according to filings. To stay afloat, the companies are finalizing a debtor-in-possession financing package, including an interim draw of $1.5 million and a potential total of $6 million.

The debtors, represented by attorneys Davor Rukavina and J. Kyle Jaksa of Munsch Hardt Kopf & Harr PC, did not immediately respond to requests for comment.

The Road Ahead

While drilling activity is picking back up in Texas, the Chapter 11 filings highlight the precarious balance between capital-intensive infrastructure projects, volatile energy demand, and lender relationships. Whether FCI Sand can secure enough financing to restructure — or whether the lender dispute escalates into litigation — remains to be seen.