UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT: April 13, 2017

(Date of earliest event reported)

Forbes Energy Services Ltd.

(Exact Name of Registrant as Specified in Its Charter)

(361) 664-0549

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Explanatory Note:

As previously disclosed, on January 22, 2017, Forbes Energy Services Ltd., or the Company, and its domestic subsidiaries, or collectively, the Debtors, filed voluntary petitions, or the Bankruptcy Petitions, for reorganization under chapter 11 of the United States Bankruptcy Code, or the Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of Texas-Corpus Christi Division, or the Bankruptcy Court, pursuant to the terms of a Restructuring Support Agreement (as defined below) that contemplated the reorganization of the Debtors pursuant to a prepackaged plan of reorganization, as amended and supplemented, the Plan. On March 29, 2017, the Bankruptcy Court entered an order, or the Confirmation Order, confirming the Plan. On April 13, 2017, or the Effective Date, the Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases.

The Plan was previously filed as Exhibit 99.1 to the Current Report on Form 8-K filed on December 23, 2016 and is incorporated herein by reference. The Confirmation Order was previously filed as Exhibit 99.1 to the Current Report on Form 8-K filed on March 31, 2017 and is incorporated herein by reference.

Item 1.01 – Entry into a Material Definitive Agreement.

Loan and Security Agreement

On the Effective Date, the Debtors entered into a loan and security agreement, or the New Loan Agreement, with certain financial institutions party thereto from time to time as lenders, or the Lenders, and Wilmington Trust, National Association, as agent for the Lenders, or the Agent.

Forbes Energy Services LLC, a subsidiary of the Company, is the borrower, or the Borrower, under the New Loan Agreement. The Borrower’s obligations have been guaranteed by the Company and by TX Energy Services, LLC, C.C. Forbes, LLC and Forbes Energy International, LLC, each direct subsidiaries of the Borrower and indirect subsidiaries of the Company. The New Loan Agreement provides for a term loan of $50 million. Subject to certain exceptions and permitted encumbrances, the obligations under this loan are secured by a first priority security interest in substantially all the assets of the Debtors. Such term loan has a stated maturity date of April 13, 2021. The proceeds of such term loan may only be used for (i) the payment on account of the Company’s 9% senior notes due 2019 in an amount equal to $20 million; (ii) the payment of costs, expenses and fees incurred on or prior to the Effective Date in connection with the preparation, negotiation, execution and delivery of the New Loan Agreement and documents related thereto; and (iii) subject to satisfaction of certain release conditions set forth in the New Loan Agreement, for general operating, working capital and other general corporate purposes of the Borrower not otherwise prohibited by the terms of the New Loan Agreement.

Borrowings under this term loan will bear interest at a rate equal to five percent (5%) per annum payable quarterly in cash, or the Cash Interest Rate, plus (ii) an initial PIK interest rate of seven percent (7%) commencing July 1, 2017 to be capitalized and added to the principal amount of the term loan or, at the election of the Borrower, paid in cash. The PIK interest increases by two percent (2%) twelve months after the Effective Date and every twelve months thereafter until maturity. Upon and after the occurrence of an event of default, the Cash Interest Rate will increase by two percentage points per annum.

The Borrower is also responsible for certain other administrative fees and expenses. In connection with the execution of the New Loan Agreement, the Borrower paid the Lenders a funding fee of $3 million, and paid certain Lenders a backstop fee of $2 million.

The Debtors are able to voluntarily repay the outstanding term loan at any time without premium or penalty. The Debtors are required to use the net proceeds from certain events, including but not limited to, the disposition of assets, certain judgments, indemnity payments, tax refunds, pension plan refunds, insurance awards and certain incurrences of indebtedness to repay outstanding loans under the New Loan Agreement. The Debtors may also be required to use cash in excess of $20 million to repay outstanding loans under the New Loan Agreement.

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The New Loan Agreement includes customary negative covenants for an asset-based term loan, including covenants limiting the ability of the Debtors to, among other things, (i) effect mergers and consolidations, (ii) sell assets, (iii) create or suffer to exist any lien, (iv) make certain investments, (v) incur debt and (vi) transact with affiliates. In addition, the New Loan Agreement includes customary affirmative covenants for an asset-based term loan, including covenants regarding the delivery of financial statements, reports and notices to the Agent. The New Loan Agreement also contains customary representations and warranties and event of default provisions for a secured term loan.

The foregoing description is a summary and is qualified in its entirety by reference to the New Loan Agreement, which is incorporated by reference to Exhibit 10.1 hereto.

Letter of Credit Facility

On the Effective Date, the outstanding principal balance of $15 million plus outstanding interest and fees under the loan and security agreement dated as of September 9, 2011 and subsequently amended, or the Prior Loan Agreement, with Regions Bank, or Regions, and Regions as the sole lender party thereto, was paid off and the Prior Loan Agreement was terminated in accordance with the Plan. On the Effective Date, the Debtors entered into a letter of credit facility with Regions, or the New Regions Facility, to cover the letters of credit and Bank Product Obligations (as defined in the Prior Loan Agreement) then outstanding under the Prior Loan Agreement. Additionally, on the Effective Date, Regions will continue to hold the cash pledged by the Debtors to collateralize all outstanding letters of credit and Bank Product Obligations under the Prior Loan Agreement that are covered by the New Regions Facility.

The foregoing description is a summary and is qualified in its entirety by reference to the New Regions Facility, which is incorporated by reference to Exhibit 10.2 hereto.

Registration Rights Agreement

Pursuant to the Plan, on the Effective Date, the Company and certain of its stockholders executed a registration rights agreement, or the Registration Rights Agreement.

Pursuant to the Registration Rights Agreement, among other things, any holder that, together with such holder’s affiliates or, collectively, a Demand Holder, (i) beneficially owns at least ten percent (10%) of the outstanding shares of the reorganized Company’s common stock, or the New Common Stock, as of the Effective Date and (ii) continues to beneficially own at least five percent (5%) of the aggregate outstanding shares of New Common Stock will have the right to request the Company to file with the Securities and Exchange Commission, or the SEC, a registration statement under the Securities Act of 1933, as amended, or the Securities Act, or a Demand Registration, on Form S-1, or a Long-Form Registration, or Form S-3, or a Short-Form Registration, of all or any portion of the Registrable Securities (as defined below) held by such holder. Notwithstanding the foregoing, the Company shall be required to conduct no more than two Long-Form Registrations and an unlimited number of Short-Form Registrations for Demand Holders. Any Demand Holder may request that any offering conducted under a Long-Form Registration or a Short-Form Registration be underwritten.

The term “Registrable Securities” means at any time New Common Stock held or beneficially owned by any party to the Registration Rights Agreement, including (i) any New Common Stock issued pursuant to the Plan or upon the conversion, exercise or exchange, as applicable, of any other securities and/or interests issued pursuant to the Plan and (ii) any shares of New Common Stock acquired in the open market or otherwise purchased or acquired by such person after the Effective Date; provided, however, Registrable Securities shall irrevocably cease to constitute Registrable Securities upon the earliest to occur of: (i) the date on which such securities have been disposed of pursuant to an effective registration statement under the Securities Act; (ii) the date on which such securities have been disposed of pursuant to Rule 144 promulgated under the Securities Act; (iii) the date on which such securities have been transferred to any person in a transfer not complying with the provisions of the Registration Rights Agreement governing the transfer of registration rights; and (iv) the date on which such securities cease to be outstanding.

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Pursuant to the Registration Rights Agreement, among other things, the Company will file with the SEC a shelf registration statement on Form S-1 promptly after the Effective Date. Following the effectiveness of the shelf registration statement, any Demand Holder may request to effectuate a shelf takedown off of such shelf by means of an underwritten public offering. The Company, however, will not be obligated to effect an underwritten shelf takedown within 60 days after the pricing of a previous underwritten shelf takedown.

In the event the Company proposes to file a Demand Registration or a Company-initiated registration statement with respect to a public offering of any class of the Company’s equity securities other than a registration statement on Form S-8 or Form S-4, such registration a Piggyback Registration, the Company must notify all holders of Registrable Securities of its intention to effect such Piggyback Registration.

The Registration Rights Agreement includes customary indemnification provisions.

The foregoing description is a summary and is qualified in its entirety by reference to the Registration Rights Agreement, which is attached hereto as Exhibit 10.3 and incorporated herein by this reference.

Management Incentive Plan

On the Effective Date, pursuant to the operation of the Plan, the Forbes Energy Services Ltd. 2017 Management Incentive Plan, or the MIP, became effective.

The board of directors of the Company, or the Board, or a committee of the Board, or the MIP Committee, will administer the MIP. The MIP Committee has broad authority under the MIP to, among other things: (i) select participants; (ii) determine the terms and conditions, not inconsistent with the MIP, of any award granted under the MIP; (iii) determine the number of shares to be covered by each award granted under the MIP; and (iv) determine the fair market value of awards granted under the MIP, subject to certain exceptions.

Persons eligible to receive awards under the MIP include officers and employees of the Company and its subsidiaries. The types of awards that may be granted under the MIP include stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other forms of stock based awards.

The maximum number of New Common Shares that may be issued or transferred pursuant to awards under the MIP is 750,000, which number may be increased with the approval of the Company’s stockholders. If any outstanding award granted under the MIP expires or is terminated or canceled without having been exercised or settled in full, or if shares of New Common Stock acquired pursuant to an award subject to forfeiture are forfeited, the shares of New Common Stock allocable to the terminated portion of such award or such forfeited shares will revert to the MIP and will be available for grant under the MIP as determined by the MIP Committee in consultation with the Chairman of the Board, subject to certain restrictions.

As is customary in management incentive plans of this nature, in the event of any change in the outstanding shares of New Common Stock by reason of a stock split, stock dividend or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction, an equitable adjustment will be made in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the MIP. Such adjustment may include an adjustment to the maximum number and kind of shares of stock or other securities or other equity interests as to which awards may be granted under the MIP, the number and kind of shares of stock or other securities or other equity interests subject to outstanding awards and the exercise price thereof, if applicable.

The foregoing description is a summary and is qualified in its entirety by reference to the MIP, which is attached hereto as Exhibit 10.4 and incorporated herein by this reference.

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Item 1.02 – Termination of a Material Definitive Agreement

Equity Interests

On the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests (which include the Company’s prior common stock, par value $0.04 per share, the Company’s preferred stock, awards under the Company’s 2012 Incentive Compensation Plan, or the Compensation Plan, and the preferred stock purchase rights under the Rights Agreement dated as of May 19, 2008 and subsequently amended on July 8, 2013, or the Rights Agreement, between the Company and CIBC Mellon Trust Company, as rights agent) of the Company were extinguished without recovery.

Debt Securities

On the Effective Date, by operation of the Plan, the obligations of the Debtors under that certain indenture dated June 7, 2011 among the Company, as issuer, the guarantors party thereto and Wells Fargo Bank, N.A., as trustee, governing the terms of the Company’s 9% senior notes due 2019, or the 9% Senior Notes, were discharged and cancelled. Additionally, on the Effective Date, the outstanding principal balance of $15 million under the Prior Loan Agreement was paid off and the Prior Loan Agreement was terminated in accordance with the Plan. On the Effective Date, the Debtors entered into the New Regions Facility to cover the letters of credit and Bank Product Obligations (as defined in the Prior Loan Agreement) then outstanding under the Prior Loan Agreement.

Item 2.03 – Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 3.02 – Unregistered Sales of Equity Securities

On the Effective Date, the Company issued 5,249,997 shares of New Common Stock to holders of the 9% Senior Notes, or the Plan Shares. The Plan Shares were issued pursuant to an exemption from the registration requirements of the Securities Act under Section 1145 of the Bankruptcy Code.

Item 3.03 – Material Modification to the Rights of Securities Holders

The information set forth in Items 1.01, 1.02, 3.02 and 5.03 of this Current Report on Form 8-K is incorporated by reference herein.

Item 5.01 – Changes in Control of Registrant.

As disclosed elsewhere in this Current Report on Form 8-K, on the Effective Date, all equity interests (which include the Company’s prior common stock, par value $0.04 per share, the Company’s preferred stock, awards under the Compensation Plan and the preferred stock purchase rights under the Rights Agreement) of the Company were extinguished without recovery and shares of New Common Stock were issued pursuant to the Plan. As a result of the distribution of the Plan Shares and the cancellation of such prior equity interests pursuant to the Plan, holders of the 9% Senior Notes received one hundred percent (100%) of the outstanding shares of New Common Stock (subject to dilution by awards issued or issuable under the MIP on or after the Effective Date).

As disclosed in Item 5.02 below, pursuant to the Plan, the terms of five of the six current members of the Board will terminate, and on the Effective Date, the new Board of the Company, or the New Board, has five members designated in accordance with the Plan, four of whom will be new to the Board.

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Item 5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Departure of Directors

In accordance with the Plan, Dale W. Bossert, Travis H. Burris, Charles C. Forbes, Jr., Ted A. Izatt and William W. Sherrill resigned from the Board on the Effective Date.

Appointment of Directors

The New Board took office on the Effective Date and consists of the following members:

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Certain Relationships and Related Party Transactions

The transactions described under the headings “Loan and Security Agreement” and “Registration Rights Agreement” in Item 1.01 may be deemed to be related party transactions. As such, the disclosure contained under those headings is incorporated by reference into this Item 5.02.

In addition, as discussed above, Mr. First serves as the Chief Investment Officer and Managing Director of Ascribe and Mr. Wyard serves as a Managing Partner of Solace. Pursuant to the Plan, each of Ascribe and Solace had the right to designate one member of the New Board. Additionally, Ascribe and Solace had the right to jointly designate one member of the New Board and, together with certain other holders of the 9% Senior Notes, the right to designate the one other member of the New Board. Furthermore, Ascribe and/or one of more of its affiliates own approximately twenty-one and fourth tenths percent (21.4%) of the New Common Stock outstanding on the Effective Date and funded approximately $13.9 million of the aggregate principal amount of the term loan governed by the New Loan Agreement. Solace and/or one of its affiliates own approximately fifteen and eight tenths percent (15.8%) of the New Common Stock outstanding on the Effective Date and funded approximately $10.2 million of the aggregate principal amount of the term loan covered by the New Loan Agreement.

The disclosure contained under the heading “Loan and Security Agreement” in Item 1.01 is incorporated by reference into this Item 5.02.

Committees of the Board

The standing committees of the New Board will consist of an Audit Committee and a Compensation Committee.

The New Board has appointed Messrs. Arnold and Butero to serve as members of the Audit Committee. Mr. Arnold was appointed Chairman of the Audit Committee.

The New Board has appointed Messrs. Arnold and Butero to serve as members of the Compensation Committee. Mr. Butero was appointed Chairman of the Compensation Committee.

Compensation of Directors

Members of the New Board, except Mr. Crisp, will each be paid an annual director retainer of $125,000 and may receive compensation in the form of shares of New Common Stock at an amount to be determined at a later date. Each of Messrs. First and Wyard has directed the Company to pay any director compensation owed to him to Ascribe and Solace, respectively. Mr. Crisp will be compensated in accordance with his management employment agreement, as discussed below.

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Executive Officers

On the Effective Date, the executive officers of the Company are:

Prior to becoming the Executive Vice President and Chief Operating Officer of the Company, Mr. Macek served as the Executive Vice President of Well Servicing of C.C. Forbes LLC since 2014. From 2007 to 2014, Mr. Macek served as the Vice President of Well Servicing of C.C. Forbes, LLC. Mr. Macek received his Bachelor of Business Administration in Marketing, summa cum laude, from Texas A&M University in Kingsville.

On the Effective Date, Charles C. Forbes, Jr., who previously served as Executive Vice President and Chief Operating Officer of the Company, elected to retire from his officer positions with the Company and its subsidiaries but will continue as an employee of the Company on a reduced time commitment basis.

Management Employment Agreements

On the Effective Date, pursuant to the Plan, Forbes Energy Services LLC entered into (i) amended and restated employment agreements, replacing the prior agreements, with Messrs. Crisp and Cooper and (ii) an employment agreement with Mr. Macek, collectively, the Employment Agreements. Below is a summary of the material terms of the Employment Agreements.

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The foregoing description is a summary and is qualified in its entirety by reference to the Employment Agreements of Messrs. Crisp, Cooper and Macek, which are attached hereto as Exhibits 10.4, 10.5 and 10.6, respectively, and incorporated herein by this reference.

MIP

As discussed under the heading “Management Incentive Plan” in Item 1.01, on the Effective Date, pursuant to the operation of the Plan, the MIP became effective. The MIP provides for the issuance of equity-based awards with respect to, in the aggregate, up to 12.5% of the reorganized Company’s total outstanding New Common Stock. The disclosure contained under the heading “Management Incentive Plan” in Item 1.01 is incorporated by reference into this Item 5.02.

Item 5.03 – Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On the Effective Date, the Company converted from a Texas corporation to a Delaware corporation. In addition, on the Effective Date, pursuant to the terms of the Plan, the Company filed a certificate of incorporation, or the Certificate of Incorporation, with the office of the Secretary of State of the State of Delaware. Also on the Effective Date, and pursuant to the terms of the Plan, the Company adopted the second amended and restated bylaws, or the Bylaws. Descriptions of the material provisions of the Certificate of Incorporation and the Bylaws are contained in the Company’s Registration Statement on Form 8-A filed with the SEC on April 18, 2017, which description is incorporated by reference herein.

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Item 7.01 – Regulation FD Disclosure

On April 17, 2017, the Company issued a press release announcing the Debtors’ emergence from bankruptcy. A copy of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.

The information included in this Form 8-K under Item 7.01 and Exhibit 99.2 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to liabilities of that Section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Exchange Act or the Securities Act of 1933, as amended.

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Item 9.01 – Financial Statements and Exhibits

(d) Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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