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Chapter 11 Proceedings and Ability to continue as a Going Concern (Notes)
9 Months Ended
Sep. 30, 2019
Reorganizations [Abstract]  
Chapter 11 Proceedings and Ability to Continue as a Going Concern
2. Chapter 11 Proceedings and Ability to Continue as a Going Concern

Voluntary Reorganization Under Chapter 11 of the U.S. Bankruptcy Code

On July 1, 2019 (“Petition Date”), Weatherford Ireland, Weatherford International Ltd. (“Weatherford Bermuda”), and Weatherford International, LLC (“Weatherford Delaware”) (collectively, “Weatherford Parties,” or “Debtors”), filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”). The Debtors obtained joint administration of their Chapter 11 cases under the caption In re Weatherford International plc, et al., Case No. 19-33694 (“Cases”). On June 28, 2019, the Debtors commenced a solicitation for acceptance of their prepackaged plan of reorganization (“Plan”) by causing the Plan and the corresponding disclosure statement to be distributed to certain creditors of the Company that were entitled to vote on the Plan. On September 11, 2019 the Plan, as amended, was confirmed by the Bankruptcy Court.

Weatherford Ireland filed a petition on September 23, 2019 under the Irish Companies Act 2014 in Ireland (“Irish Examinership Proceeding”) to seek approval for its scheme of arrangement following confirmation of the Plan in the U.S. The filing of the Irish Examinership Proceeding commenced a 100-calendar day protection period under Irish law, during which Weatherford Ireland will have the benefit of protection against enforcement and other actions by its creditors. Weatherford Ireland intends to continue operating its business in the ordinary course during the protection period. It is anticipated that the terms of the Irish scheme will mirror the terms of the Plan.

Weatherford Bermuda has commenced provisional liquidation proceedings (“Bermuda Proceedings”) pursuant to the Bermuda Companies Act 1981 by presenting a winding up petition to the Supreme Court of Bermuda (“Bermuda Court”). The Bermuda Court appointed a provisional liquidator who acts as an officer of the Bermuda Court, and is required under the Bermuda Court’s order to report from time to time on the progress of the Bermuda Proceedings. The provisional liquidator will have the power to oversee Weatherford Bermuda’s restructuring process. The Debtors’ management team and board of directors will remain in control of Weatherford Bermuda’s day-to-day operations and its Cases. The appointment of the provisional liquidator provided an automatic statutory stay of proceedings in Bermuda against Weatherford Bermuda and its assets. On the return date of September 6, 2019 for the Bermuda petition – similar to a second day hearing in a Chapter 11 proceeding – Weatherford Bermuda postponed its petition for a specified period, while the Cases are administered. Before the Debtors emerge from Chapter 11, Weatherford Bermuda may, along with the provisional liquidator and subject to the direction of the Bermuda Court, convene meetings of the impaired creditors in order to consider and approve, if appropriate, a scheme of arrangement pursuant to the Bermuda Companies Act 1981. It is anticipated that the terms of the Bermuda scheme will mirror the terms of the Plan and once properly approved, is a mechanism for ensuring that all of the impaired creditors of Weatherford Bermuda are bound by the terms of the Bermuda scheme. On October 25, 2019, Weatherford Bermuda filed its originating summons with the Bermuda Court.

Our remaining non-debtor affiliates that have not filed voluntary petitions under the Bankruptcy Code will continue operating their businesses and facilities without disruption to customers, vendors, partners or employees. The Plan and first day relief provide that vendors and other unsecured creditors who continue to work with the non-debtor affiliates on existing terms will be paid in full and in the ordinary course of business (in the case of creditors of the Debtors, following consummation of the Plan). All existing customer and vendor contracts continue to remain in place and be serviced in the ordinary course of business.

Subject to certain exceptions, under the Bankruptcy Code, the filing of the Cases automatically enjoined, or stayed, the continuation of most judicial or administrative proceedings or filing of other actions against the Debtors or their property to recover, collect or secure a claim arising prior to the date of the Cases. In addition, all of the Debtors’ prepetition unsecured senior notes and related unpaid interest are liabilities subject to compromise, further discussed below. Since the commencement of the Cases, the Debtors have continued to operate their businesses as debtors in possession under the jurisdiction of and in accordance with the applicable provisions of the Bankruptcy Code, orders of the Bankruptcy Court, the Irish Examinership Proceeding and the Bermuda Proceeding.

Restructuring Support Agreement

On May 10, 2019, the Debtors entered into the Restructuring Support Agreement (“RSA”) with certain holders of our unsecured notes (“Consenting Creditors”). The RSA sets forth, subject to certain conditions, the terms of the capital financial restructuring of the Company (“Transaction”).

On August 23, 2019, the Debtors entered into the second amendment of the RSA (the “Second RSA Amendment”) with certain of the noteholders, and certain equity holders who collectively hold approximately 208 million shares of the Weatherford’s outstanding ordinary shares (the “Consenting Equity Holders”) which joins the Consenting Equity Holders as parties to the RSA. In addition, it provided for the payment of $250 thousand (included in Professional Fees of the Reorganization Items table later in this footnote) to the Consenting Equity Holders’ counsel and amended the terms of the new warrants to be issued under the Plan to the holders of the Company’s existing ordinary shares. The amended new warrant terms include extending the maturity date of the warrants to four years after the effective date of the Plan and reduced the exercise price. 

On September 9, 2019, the Debtors and certain of the noteholders entered into a third amendment to the RSA (the “Third RSA Amendment”). Pursuant to the terms of the Third RSA Amendment the Debtors will issue a single tranche of up to $2.1 billion aggregate principal amount of new unsecured notes (“Exit Notes”) upon emergence from bankruptcy, consisting of up to $1.6 billion of Exit Notes issued for cash to holders of subscription rights issued in a rights offering (the “Rights Offering Notes”) and to holders of Unsecured Notes Claims and $500 million of Exit Notes issued on a pro rata basis (the “Takeback Notes”). The Exit Notes will be issued in lieu of the two tranches of new unsecured notes in aggregate principal amount of $2.5 billion previously contemplated by the original RSA. The Exit Notes will bear interest at a rate of 11% per annum and will otherwise generally have the terms set forth in the form of New Senior Unsecured Notes Indenture (“Notes Indenture”) with modifications to reflect the amendments contemplated by the Third RSA Amendment, the removal of the 125% of Consolidated Cash Flow prong in the Notes Indenture and the addition of a covenant requiring the Company to use commercially reasonable efforts to obtain and maintain a rating for the Exit Notes from both Standard & Poor’s and Moody’s Investors Service.

On September 11, 2019, the Transaction was approved through the confirmation of the Plan filed in the Cases.

The amended RSA and the confirmed Plan contemplates a comprehensive deleveraging of our balance sheet and provides, in pertinent part, as follows (as further described in later paragraphs):

Our existing unsecured notes will be cancelled and exchanged for 99% of the ordinary shares of the reorganized Company (“New Common Stock”) and the Debtors will issue a single tranche of up to $2.1 billion aggregate principal amount of new Exit Notes upon emergence from bankruptcy, consisting of up to $1.6 billion of Rights Offering Notes (fully backstopped by Commitment Parties in the Backstop Commitment Agreement) issued for cash to holders of subscription rights issued in a rights offering and $500 million of Takeback Notes issued on a pro rata basis with a five-year maturity.

On July 3, 2019, our secured Term Loan facility and 364-day Revolving Credit Facility were repaid in full with borrowings from the DIP Credit Agreement, also entered into the same day. We expect to repay the DIP Credit Agreement and A&R Credit Agreement in full with proceeds from the exit financing to include the Rights Offering Notes and a combination of credit facilities in the principal amount of up to $600 million upon the effective date of the Plan.

All trade claims against the Company whether arising prior to or after the commencement of the Cases will be paid in full in the ordinary course of business.

Our existing equity will be cancelled and exchanged for 1% of the New Common Stock and four-year warrants to purchase 10% of the New Common Stock, both subject to dilution on account of the equity issued pursuant to the management incentive plan. The strike price of the warrants is expected to be set at an equity value at which the noteholders would receive a recovery equal to par as of the date of the commencement of the Cases in respect of the existing unsecured notes and all other general unsecured claims that are pari passu with the existing unsecured notes.

The RSA includes certain milestones for the progress of the Cases, which include the dates by which the Weatherford Parties are required to, among other things, obtain certain court orders and complete the Transaction. In addition, the parties to the RSA will have the right to terminate the RSA and their support for the Transaction under certain circumstances, including, in the case of the Weatherford Parties, if the board of directors of any Weatherford Party determines in good faith that performance under the RSA would be inconsistent with its fiduciary duties.

Payments Due on Certain Indebtedness

The Debtors’ 7.75% Senior Notes due 2021, 8.25% Senior Notes due 2023 and 6.80% Senior Notes due 2037 (together, “Certain Senior Notes”) provide for an aggregate $69 million interest payment that became due on June 15, 2019. The applicable indenture governing the Certain Senior Notes provides a 30-day grace period that extended the latest date for making this interest payment to July 16, 2019, before an event of default would occur under the applicable indenture. The Debtors elected to not make this interest payment on the due date and to utilize the 30-day grace period provided by the indentures. As a result of filing the Cases on July 1, 2019, an event of default occurred under each indenture governing these unsecured notes, which automatically accelerated maturity of the principal, plus any accrued and unpaid interest, on such series of unsecured notes and certain other obligations of the Debtors. Any efforts to enforce such payment obligations under the unsecured notes or other accelerated obligations of the Debtors are automatically stayed as a result of the Cases, and the creditors’ rights of enforcement in respect of the unsecured notes and other accelerated obligations of the Debtors are subject to the applicable provisions of the Bankruptcy Code. The interest and principal on this indebtedness remains unpaid as of this report date. In addition, all of the Debtors’ prepetition unsecured senior notes and related unpaid interest are now classified as “Liabilities Subject to Compromise” on our Condensed Consolidated Balance Sheets.

The Debtors’ Term Loan Agreement required a quarterly payment of $12.5 million plus interest that became due on June 30, 2019. On July 1, 2019, the Debtors and the Term Loan Lenders entered into a Term Loan Forbearance Agreement where the lenders agreed to forbear from exercising their rights and remedies available to them, including the right to accelerate any indebtedness, for a specified period of time. As of July 3, 2019, all unpaid principal and interest under the Term Loan Agreement were repaid in full. See discussion below.

Forbearance Agreements

On July 1, 2019, the Debtors and the Credit Agreement Lenders under the Amended and Restated Credit Agreement (the “A&R Credit Agreement”), dated as of May 9, 2016, among WOFS Assurance Limited and Weatherford Bermuda, as borrowers, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto entered into a forbearance agreement (the “Credit Agreement Forbearance Agreement”) with respect to certain defaults under the A&R Credit Agreement, including those arising from the Debtors’ commencement of the Cases. Specifically, under the Credit Agreement Forbearance Agreement, the Credit Agreement Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time. Under the terms of the Credit Agreement Forbearance Agreement, the Debtors paid a fee for the ratable account of the Credit Agreement Lenders in an amount equal to 0.25% on the outstanding principal amount of the loans and total letter of credit exposure under the A&R Credit Agreement. Additionally, (i) to the extent such entities were not already guarantors under the A&R Credit Agreement, all subsidiaries of the Company who are guarantors under the DIP Credit Agreement (defined below) joined as guarantors under the A&R Credit Agreement and (ii) all U.S. and Canadian subsidiaries of the Company granted a second lien security interest in favor of the Credit Agreement Lenders in the same assets that such U.S. and Canadian subsidiaries pledged a first lien security interest in under the DIP Credit Agreement; provided that the aggregate amount of the guaranteed obligations to be secured under the A&R Credit Agreement did not exceed $100 million; and provided, further, that if the obligations under the A&R Credit Agreement are not paid in full by November 30, 2019, such second lien security interest of the Credit Agreement Lenders shall automatically transition from second liens to pari passu liens with the liens under the DIP Credit Agreement.

On July 1, 2019, the Debtors and the Term Loan Lenders under the Term Loan Agreement, dated as of May 4, 2016, among Weatherford Bermuda, as borrower, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from
time to time party thereto (the “Term Loan Agreement”) entered into a forbearance agreement (the “Term Loan Forbearance Agreement”) with respect to certain defaults under the Term Loan Agreement. Specifically, under the Term Loan Forbearance Agreement, the Term Loan Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time. On July 3, 2019, the Company repaid in full its outstanding indebtedness under the Term Loan.

On July 1, 2019, the Debtors and the 364-Day Lenders under the 364-Day Revolving Credit Agreement, dated August 16, 2018, among Weatherford Bermuda, as borrower, the other borrowers party thereto, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (“364-Day Credit Agreement”) entered into a forbearance agreement (the “364-Day Revolving Forbearance Agreement”) with respect to certain defaults under the 364-Day Credit Agreement. Specifically, under the 364-Day Revolving Forbearance Agreement, the 364-Day Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time. On July 3, 2019, the Company repaid in full its outstanding indebtedness under the 364-Day Revolving Credit Agreement.

On July 1, 2019, the Debtors and three lenders under the DIP Credit Agreement (the “Swap Counterparties”) each party to a hedging agreement with Weatherford Bermuda for the purpose of hedging foreign currency exposure incurred by the Weatherford Parties (each, a “Swap Agreement” and, collectively, the “Swap Agreements”) entered into a consent to swap agreement termination forbearance (the “Swap Forbearance Agreement”) with respect to certain defaults under the Swap Agreements. Specifically, under the Swap Forbearance Agreement, the Swap Counterparties agreed to forbear from exercising their rights and remedies available to them due to certain Events of Default and Termination Events defined in the agreements for a specified period of time. On July 3, 2019, the Weatherford Parties entered into amended and restated Swap Agreements with such Swap Counterparties to govern existing and future foreign currency transactions entered into with such Swap Counterparties.

Backstop Commitment Agreement

On July 1, 2019, the Weatherford Parties and the commitment parties thereto (the “Initial Commitment Parties”) entered into a Backstop Commitment Agreement. Pursuant to the terms of the Plan, and subject to approval by the Bankruptcy Court in connection with confirmation of the Plan, the Company intends to offer to holders of its existing unsecured notes, including the Commitment Parties, subscription rights to purchase the Exit Notes in aggregate principal amount of $1.25 billion, upon the Company’s emergence from bankruptcy. On September 9, 2019, the Weatherford Parties, certain of the Initial Commitment Parties and certain additional commitment parties (the “Additional Commitment Parties” and, together with the Initial Commitment Parties, the “Commitment Parties”) entered into an amendment to the Backstop Commitment Agreement. The Backstop Commitment Agreement Amendment provides for (i) the joinder of the Additional Commitment Parties to the Backstop Commitment Agreement, (ii) the increase in the backstop commitment by $350 million (the “Increased Commitment”) from $1.25 billion to up to $1.6 billion, and (iii) an amendment to the Backstop Commitment Agreement to account for the changes reflected in the Third RSA Amendment.

Subject to the terms and conditions contained in the Backstop Commitment Agreement, the Consenting Creditors agreed to purchase any Exit Notes that are not duly subscribed for pursuant to the rights offering at a price equal to $1,000 per $1,000 in principal amount of the Exit Notes purchased by such Commitment Party. On July 1, 2019, as consideration for the commitment, the Weatherford Parties made an aggregate payment of $62.5 million in cash to the Commitment Parties. Except under certain circumstances set forth in the Backstop Commitment Agreement, the payment is non-refundable, regardless of the principal amount of unsubscribed Exit Notes (if any) purchased by the Commitment Parties. As consideration for the Increased Commitment agreed to on September 9, 2019, the Weatherford Parties will make an aggregate payment of $18.7 million in cash to certain of the Commitment Parties upon our emergence date. Subject to certain termination rights, the payment is non-refundable, regardless of the principal amount of unsubscribed Exit Notes (if any) purchased by the Commitment Parties.

The transactions contemplated by the Backstop Commitment Agreement are conditioned upon the satisfaction or waiver of customary conditions for transactions of this nature, including, without limitation, that (i) the Bankruptcy Court shall have approved the rights offering, (ii) the Bankruptcy Court shall have confirmed the Plan and (iii) the rights offering shall have been conducted, in all material respects, in accordance with the approval of the Bankruptcy Court, the Plan and the Backstop Commitment Agreement.

Debtor in Possession Credit Agreement

On July 3, 2019, the Weatherford Parties entered into a senior secured superpriority debtor in possession credit agreement (the “DIP Credit Agreement”). The DIP Credit Agreement has two debtor in possession (“DIP”) facilities to provide liquidity during the pendency of the Cases. The facilities consist of (a) a DIP revolving credit facility in the principal amount of up to $750 million provided by banks or other lenders and (b) a DIP term loan facility in the amount of up to $1.0 billion, which is fully backstopped by the Consenting Creditors. The DIP Credit Agreement will mature on the earlier of (i) the date that is 12 months after the Weatherford Parties’ entry into the DIP Credit Agreement or (ii) the date of completion of the Transaction. The DIP Credit Agreement bears interest (i) with respect to Eurodollar borrowings, based on an adjusted LIBOR rate plus an applicable margin of 3.00%, with a 0.00% LIBOR floor and (ii) with respect to alternate base rate borrowings, a base rate plus an applicable margin of 2.00%. In addition to paying interest on outstanding principal amounts under the DIP Credit Agreement, the Debtors will be required to pay an unused commitment fee to the revolving facility lenders in respect of the unutilized DIP revolving facility commitments at a rate equal to 0.375% per annum on the average daily amount of the unutilized revolving facility commitments.

The DIP Credit Agreement has a minimum liquidity covenant of $150 million and is secured by substantially all the personal assets and properties of the Debtors and certain of their subsidiaries. The DIP Credit Agreement is also guaranteed on an unsecured basis by certain other subsidiaries of the Debtors. At September 30, 2019, we were in compliance with our covenants under the DIP Credit Agreement.

On July 3, 2019, the Debtors borrowed approximately $1.4 billion under the DIP Credit Agreement and the proceeds of the borrowings under the DIP Credit Agreement were used to repay certain prepetition indebtedness, cash collateralized certain obligations with respect to letters of credit and similar instruments and finance the working capital needs and general corporate purposes of the Debtors and certain of their subsidiaries. On July 3, 2019, the Company repaid all outstanding amounts due under the secured Term Loan Agreement and 364-Day Credit Agreement totaling approximately $616 million with borrowings from our DIP Credit Agreement. In addition, the Company cash collateralized approximately $271 million of letters of credit and similar instruments with borrowings from the DIP Credit Agreement. See “Note 11 – Short-term Borrowings and Other Debt Obligations” for additional details. At September 30, 2019, DIP Credit Agreement borrowings were $1.386 billion.

Liquidity Concerns and Actions to Address Liquidity Needs; Going Concern

Our bond and share price decline, as well as our declining credit ratings, have over time increased the level of uncertainty in our business and have impacted various key stakeholders, including our employees, our customers and suppliers, and our key lenders. Continued weak industry conditions have negatively impacted our results of operations and cash flows and may continue to do so in the future. In order to decrease our level of indebtedness and maintain the liquidity at levels we believed would be sufficient to meet our commitments, we undertook a number of actions, including minimizing capital expenditures, divesting non-core businesses and further reducing our recurring operating expenses. Ultimately, we concluded, even after taking these actions, we would not have sufficient liquidity to satisfy our debt service obligations and meet other financial obligations as they came due. As a result, on May 10, 2019, we announced the Company’s execution of the RSA and on July 1, 2019 the Debtors filed the Cases. We expect the DIP Credit Agreement should provide sufficient liquidity for the Company during the pendency of the Cases.

Upon emergence, we expect the exit financing to include the backstopped Rights Offering Notes of $1.6 billion and a combination of a contemplated senior secured asset based loan revolving credit facility and a contemplated senior secured revolving credit facility dedicated for letters of credit. On October 28, 2019, the Company entered into a proposal letter pursuant to these facilities. We expect the exit financing will provide the necessary liquidity to repay the outstanding DIP Credit Agreement and A&R Credit Agreement, and will provide the necessary liquidity to conduct ongoing operations, including the credit lines for letters of credits and working capital needs.

Industry conditions and the risks and uncertainties associated with the Cases, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared in conformity with U.S. GAAP which contemplate the continuation of the Company as a going concern. There are no assurances that the Transaction as described in the RSA and the Plan will be completed successfully.

As of September 30, 2019, our unaudited Condensed Consolidated Financial Statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. In addition, our unaudited Condensed Consolidated Financial Statements have been prepared in accordance with ASC 852.

Appeal of New York Stock Exchange Determination to Delist our Ordinary Shares

Our ordinary shares are registered on the New York Stock Exchange (the “NYSE”) and were previously traded on the NYSE under the symbol “WFT.” As a result of our failure to satisfy the continued listing requirements of the NYSE, on May 13, 2019, the NYSE suspended trading in our ordinary shares and commenced procedures to delist us, which the Company has appealed. Following the NYSE’s suspension of trading of our ordinary shares, the Company’s ordinary shares commenced trading on the OTC Bulletin Board or “pink sheets” market on May 14, 2019 under the symbol “WFTIF.” After filing the Cases on July 1, 2019, our ordinary shares began trading under the symbol “WFTIQ.”

Prepetition Charges

Expenses, gains and losses that are realized or incurred before July 1, 2019 and in relation to the Cases are recorded under the caption “Prepetition Charges” on our Condensed Consolidated Statements of Operations. The $86 million of prepetition charges were recorded primarily consisted of professional and other fees related to the Cases.

Reorganization Items

Any expenses, gains and losses that are realized or incurred as of or subsequent to the Petition Date and as a direct result of the Cases are recorded under “Reorganization Items” on our Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2019, “Reorganization Items” were $303 million and consisted of the following items:
(Dollars in millions)
 
September 30, 2019
Unamortized Debt Issuance and Discount Expensed
 
$
126

Unamortized Interest Rate Derivative Loss Expensed
 
8

Reorganization Items (Non-Cash)
 
134

 
 
 
Backstop Commitment Fees
 
81

DIP Financing Fees
 
56

Professional Fees
 
32

Reorganization Items (Fees)
 
169

 
 
 
Total Reorganization Items
 
$
303

 
 
 
Reorganization Items (Fees) Unpaid
 
$
45

Reorganization Items (Fees) Paid
 
$
124



Liabilities Subject to Compromise

The Debtors’ prepetition unsecured senior notes and related unpaid accrued interest as of the Petition Date have been classified as “Liabilities Subject to Compromise” on our Condensed Consolidated Balance Sheets. These liabilities are reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although they may be settled for less. At September 30, 2019, liabilities subject to compromise of $7.6 billion consisted of the notes listed below and unpaid accrued interest as of the Petition Date:
 
September 30,
(Dollars in millions)
2019
5.125% Senior Notes due 2020
$
365

5.875% Exchangeable Senior Notes due 2021
1,265

7.75% Senior Notes due 2021
750

4.50% Senior Notes due 2022
646

8.25% Senior Notes due 2023
750

9.875% Senior Notes due 2024
790

9.875% Senior Notes due 2025
600

6.50% Senior Notes due 2036
453

6.80% Senior Notes due 2037
259

7.00% Senior Notes due 2038
461

9.875% Senior Notes due 2039
250

6.75% Senior Notes due 2040
463

5.95% Senior Notes due 2042
375

Accrued Interest on Senior Notes and Exchangeable Senior Notes
207

Liabilities Subject to Compromise
$
7,634



The principal balance on our Senior Notes and Exchangeable Senior Notes have been reclassified from “Long-term Debt” to “Liabilities Subject to Compromise” as of September 30, 2019. See also “Note 11 – Short-term Borrowings and Other Debt Obligations” for further details. Accrued interest on our Senior Notes and Exchangeable Senior Notes was also reclassified from “Other Current Liabilities” to “Liabilities Subject to Compromise” as of September 30, 2019.

The contractual interest expense on our Senior Notes and Exchangeable Senior Notes is in excess of recorded interest expense on these notes by $133 million for the three and nine months ended September 30, 2019. This excess contractual interest is not included as interest expense on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019, because the Company has discontinued accruing interest on the Senior Notes and Exchangeable Senior Notes subsequent to the Petition Date in accordance with ASC 852. We have not made any interest payments on our Senior Notes and Exchangeable Senior Notes since the commencement of the Cases.
Following are the consolidated financial statements of the entities included in the Cases:

WEATHERFORD INTERNATIONAL PLC DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)

(Dollars in millions)
Three Months Ended September 30, 2019
Revenues
$

Operating Expenses
(39
)
 
 
Operating Loss
(39
)
 
 
Other Expense:
 
Reorganization Items
(303
)
Interest Expense, Net
(26
)
Intercompany Charges for Interest and Dividends
(32
)
Equity in Losses of Subsidiaries
(838
)
Other Expense, Net
(8
)
 
 
Loss Before Income Taxes
(1,246
)
Income Tax Provision

Net Loss
$
(1,246
)





WEATHERFORD INTERNATIONAL PLC DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED BALANCE SHEETS
(UNAUDITED)

(Dollars in millions)
September 30, 2019
Assets:
 
Cash and Cash Equivalents
$
153

Restricted Cash
146

Income Tax Receivable
529

Total Current Assets
828

 
 
Investment in Subsidiaries
8,539

Intercompany Receivables, Net
1,217

Other Non-Current Assets
6

Total Assets
$
10,590

 
 
Liabilities:
 
Debtor in Possession Financing
$
1,386

Short-term Borrowings and Current Portion of Long-term Debt
310

Accounts Payables and Other Current Liabilities
64

Total Current Liabilities
1,760

 
 
Intercompany Payables, Net
2,902

Other Non-Current Liabilities
7

Total Liabilities Not Subject to Compromise
4,669

 
 
Liabilities Subject to Compromise
7,634

 
 
Debtor Entities Shareholders’ Deficit
(1,713
)
Debtor Entities Total Liabilities and Shareholders’ Deficit
$
10,590


WEATHERFORD INTERNATIONAL PLC DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in millions)
Three Months Ended September 30, 2019
Cash Flows From Operating Activities:
 
Net Loss
$
(1,246
)
Adjustments to Reconcile Net Loss to Net Cash From Operating Activities:
 
Reorganization Items
134

Charges from Parent of Subsidiary
32

Equity in Losses of Affiliates
838

Other Assets and Liabilities, Net
(583
)
Net Cash Used in Operating Activities
(825
)
 
 
Cash Flows From Financing Activities:
 
Borrowings from Debtor in Possession Credit Facility, net
1,386

Debtor in Possession Financing Payments and Payments on Backstop Agreement
(110
)
Borrowings (Repayments) of Short-term Debt, Net
(526
)
Other Financing Activities Among Subsidiaries
230

Net Cash Provided by Financing Activities
980

 
 
Net Increase in Cash and Cash Equivalents and Restricted Cash
155

Cash and Cash Equivalents and Restricted Cash at Beginning of Period
144

Cash and Cash Equivalents and Restricted Cash at End of Period
$
299