New Fortress Energy's Debt Crisis and Strategic Restructuring Pathways

New Fortress Energy (NFE) faces a critical juncture as it navigates a deepening debt crisis, with its $7.8 billion in long-term obligations and cash flow constraints threatening operational continuity. The company, which operates liquefied natural gas (LNG) infrastructure across Latin America and the Caribbean, is now weighing a U.K. scheme of arrangement over a U.S. Chapter 11 filing to restructure its debt. This decision hinges on balancing speed, cost, and asset preservation-factors that could determine the fate of both the company and its creditors.

Current Financial State and Immediate Challenges

NFE's financial distress is underscored by its $2.7 billion in 12% secured notes due 2029, which trade at roughly 30 cents on the dollar, and a $1.27 billion term loan maturing in 2028, valued at 44.6 cents on the dollar according to Bloomberg. The company has delayed its Q3 2025 earnings report, citing ongoing negotiations with creditors and the risk of defaulting on an upcoming interest payment. Project delays and a lack of investment-grade creditworthiness have further strained liquidity, particularly in Latin America, where securing LNG supply contracts has become increasingly difficult.

To avoid a full-blown bankruptcy, NFE is seeking temporary forbearance from creditors to buy time for restructuring. This approach aligns with its preference for a U.K. scheme of arrangement, a process that could allow the company to restructure without the reputational damage often associated with Chapter 11.

UK Scheme of Arrangement vs. Chapter 11: Procedural and Strategic Trade-offs

The U.K. scheme of arrangement and U.S. Chapter 11 offer distinct advantages and drawbacks for energy companies in distress. According to a report by the Global Restructuring Review, the U.K. process typically resolves restructurings in 2–18 months, with some cases completed in as little as 43 days. In contrast, traditional Chapter 11 cases can stretch for years, though prepackaged filings may be resolved swiftly. For NFE, the U.K. route could preserve the value of its contracts and operations by avoiding the public scrutiny of a Chapter 11 filing, which often signals severe distress.

However, Chapter 11 provides a critical tool absent in the U.K. scheme: an automatic stay that halts creditor enforcement actions. This feature is particularly valuable for energy companies with cross-border obligations, as it prevents non-consenting creditors from disrupting operations. For example, Nordic Aviation Capital (NAC) leveraged the automatic stay during its Chapter 11 restructuring to prevent asset seizures. NFE, which operates in multiple jurisdictions, may find this protection essential to maintaining its LNG infrastructure.

Implications for Creditor Recovery Rates

While specific recovery rate data for energy sector restructurings under the U.K. scheme or Chapter 11 remains sparse, the choice of venue could influence outcomes. A Bloomberg analysis notes that the U.K. scheme allows for targeted debt restructuring without requiring the company to be in formal distress, potentially enabling a more tailored approach to creditor negotiations. This flexibility could help NFE retain operational value, which is critical for long-term recovery.

Conversely, Chapter 11's structured process often results in higher transparency and enforceability of restructuring terms, which may benefit creditors seeking assurance. For instance, Sunnova Energy's Chapter 11 plan was approved in June 2025, with a trustee appointed to manage asset sales. However, the lack of recent energy sector Chapter 11 cases in 2025 -despite low default rates-suggests that creditors may prefer negotiated solutions over formal insolvency.

Strategic Considerations for NFE

NFE's decision to pursue a U.K. scheme reflects its prioritization of speed and operational continuity over the broader protections of Chapter 11. The company's creditors, however, face a trade-off: while the U.K. process may preserve asset value, it lacks the automatic stay, leaving them vulnerable to parallel enforcement actions unless all parties agree to forbearance according to Bloomberg. This risk is compounded by the fragmented nature of NFE's creditor groups, which have engaged separate legal advisors, signaling potential challenges in achieving a unified restructuring plan.

For investors, the outcome hinges on NFE's ability to execute a restructuring that balances stakeholder interests. A successful U.K. scheme could stabilize the company's operations and restore confidence in its LNG contracts, while a Chapter 11 filing might trigger a more aggressive but prolonged reorganization.

Conclusion

New Fortress Energy's debt crisis underscores the complexities of restructuring in a globalized energy sector. The U.K. scheme of arrangement offers an expedient path to reorganization, but its success depends on NFE's ability to secure broad creditor support and avoid operational disruptions. Meanwhile, Chapter 11's robust protections come at the cost of public scrutiny and potential delays. As the company approaches its debt deadlines, the market will closely watch how it navigates these strategic choices-and what they mean for creditor recoveries in an increasingly volatile energy landscape.