Penn Virginia filed voluntary petitions for relief under Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division, to facilitate the deleveraging of its consolidated balance sheet through a prearranged restructuring that will reduce the company’s long-term debt by more than $1 billion.

In connection with the Chapter 11 filing, the company entered into a restructuring support agreement with holders of 87% (or $1.03 billion) of its nearly $1.20 billion in total funded-debt obligations.

Subject to court approval, its RBL lenders have committed $25 million in debtor-in-possession (DIP) financing, which combined with the company’s cash reserves and cash from operations is expected to provide liquidity throughout the Chapter 11 process. Additionally, the company has obtained a commitment for up to $128 million in exit financing from its RBL lenders, led by Wells Fargo as agent, as well as a $50 million rights offering that is backstopped and supported by certain of the company’s senior unsecured noteholders.

“This is an important step forward for Penn Virginia,” said Edward B. Cloues, II, chairman and interim chief executive officer of Penn Virginia. “Once the restructuring is implemented, the company will have substantially less debt and a much stronger balance sheet. We will be in a better position to navigate the current industry environment and leverage the value of our underlying assets and operational expertise. Importantly, the announcement today provides Penn Virginia with an expedited plan to emerge from this process with committed financing, a new money investment, and a clear path to future production and success.”

As part of the company’s “first day” motions, Penn Virginia has asked the court for authorization to generally continue its ongoing employee compensation and benefit programs without change or interruption.

Additionally, Penn Virginia has filed a plan of reorganization and disclosure statement, which incorporate the terms of the restructuring agreement and other commitments made by the RBL lenders and the supporting noteholders. The company anticipates emerging from Chapter 11 by the end of the summer.

Jefferies is acting as financial advisor, Alvarez & Marsal is acting as restructuring advisor — with R. Seth Bullock of Alvarez & Marsal serving as Chief Restructuring Officer — and Kirkland & Ellis is acting as legal counsel to the company in connection with the debt restructuring.