Out of options and carrying more than $2 billion in debt, Quicksilver Resources Inc. (OTCQB: KWKA) said March 17 it filed for bankruptcy protection after failing to sell its assets in the Barnett Shale, Delaware Basin, Horn River Basin and Horseshoe Canyon.

The company said in bankruptcy filings it has $1.21 billion in assets and $2.35 billion in liabilities.

"Quicksilver's strategic marketing process has not produced viable options for asset sales or other alternatives to fully address the company's liquidity and capital structure issues,” said Glenn Darden, Quicksilver's CEO. “We believe that Chapter 11 provides the flexibility to accomplish an effective restructuring of Quicksilver for its stakeholders.”

Quicksilver has filed motions with the court to ensure business continuity, including a request for court approval to pay employee wages and benefits without interruption and for authority to continue honoring royalty, working interest and other obligations related to oil and gas leases, said Mark Reichman, research director, Simmons & Co. International.

During the Chapter 11 proceedings, suppliers are expected to be paid in full for all goods and services provided after the filing date as required by the Bankruptcy Code.

The Fort Worth, Texas-based company is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas, primarily from unconventional reservoirs including shale and coal beds in North America.

Quicksilver's Canadian subsidiary, Quicksilver Resources Canada Inc., is headquartered in Calgary, Alberta, and its operations are not affected by the bankruptcy, the company said.

By the third quarter of 2014, the company had used about 85% of its availably liquidity.

By Feb. 27, Quicksilver was willing to spend $1.2 million cash on retention bonuses that were divided among four executives. The awards are subject to clawback if the executives cease to be an employed by certain dates in 2016.

The company was delisted from the New York Stock Exchange in mid-February. Around that time, it also declined to make a $13.6 million interest payment due on its 9.125% senior notes due in 2019.

Quicksilver said that if the company did not make the interest payment before the end of a 30-day grace period, the trustee or the holders of at least 25% in the aggregate principal amount of the outstanding 2019 notes may declare the principal and accrued interest for all 2019 notes due and payable immediately.

The loan, with balance of $298 million, is among $1.2 billion in debt securities the company owes, according to bankruptcy filings.

In September, Quicksilver’s overleveraged balance sheet prompted it to put its key assets up for sale. The company had proved reserves of about 1.1 trillion cubic feet equivalent. The company has 2,000 net producing wells on 560,000 net acres.

Because of the diversity of its four key plays, the company marketed to different types of buyers. In the Horn River, for instance, the company made efforts to market LNG export opportunities to Asian buyers. Bids were due in December, extended into January but did not produce any viable options for asset sales or alternatives that would make an impact on the company’s liquidity.

As with other bankruptcies, the ripple effects of Quicksilver’s reorganization raise questions for other oil and gas companies.

Crestwood Midstream Partners LP (NYSE: CMLP) anticipates Quicksilver will pay about $2.2 million in pre-petition services that had not yet been invoiced, said Darren Horowitz, analyst, Raymond James. Quicksilver is current on all other payments and future services are expected to be provided to Quicksilver.

Crestwood “management believes exposure to Quicksilver is about $6 million per month,” Horowitz said. “All in, management has considered the issue in its prior 2015 guidance, lessening the market impact of a negative outcome for Crestwood. Given that Crestwood is a critical vendor to Quicksilver and Quicksilver is eying a restructuring … we believe Crestwood stands to receive at least partial payment via Quicksilver's attempted cash flow generation.”

Crestwood provides gathering and processing services in the Barnett Shale to Quicksilver and its partners, Tokyo Gas Barnett Resources LP and Eni Petroleum US LLC under agreements that extend to 2020, Reichman said.

Quicksilver’s legal advisers are Akin Gump Strauss Hauer & Feld LLP in the U.S. and Bennett Jones in Canada. Houlihan Lokey Capital Inc. is serving as financial advisor.

The case administration website is available here.