Drilling contractor Paragon Offshore has filed an application for administration in the United Kingdom to advance its Chapter 11 plan.
The driller said on Wednesday that it filed an application with the High Court of Justice, Chancery Division, Companies Court of England and Wales for the appointment of two partners of Deloitte LLP to serve as joint administrators of the company in the United Kingdom.
A hearing on the application is expected to be scheduled shortly in London at the English Court. Paragon’s decision to apply for the appointment of the proposed administrators is a necessary component of the consensual plan of reorganization under chapter 11 of the United States Bankruptcy Code that the company announced on May 2, 2017.
Under the consensual plan, Paragon’s existing equity will be deemed worthless and the company’s secured creditors and unsecured bondholders will receive equity in a new reorganized parent company.
“We believe that the appointment of administrators is an important positive step forward in Paragon’s restructuring process,” said Dean E. Taylor, Paragon’s President and Chief Executive Officer.
“In connection with their support of the consensual plan, which contemplates the appointment of the proposed administrators, the ad hoc committee of term lenders, the steering committee of revolving lenders, and our unsecured creditors’ committee each also support the application. Our consensual plan will eliminate more than $2.4 billion of existing debt and allow us to emerge from chapter 11 as a stronger, better positioned company capable of managing the challenges of this difficult environment.”
Taylor further added: “If the application is approved by the English Court, the next milestone will be our confirmation hearing, scheduled to commence June 7, 2017 in Delaware, following which, if confirmed, we expect to emerge from chapter 11 in July.”
Under administration, Paragon said it will continue to conduct business in its normal course. Drilling contracts will continue and vendors and employees will continue to be paid. The administrators will assume all powers to manage the affairs of the company; however, Paragon’s existing board has agreed to remain involved in an advisory capacity to the administrators until the company emerges from chapter 11, and the existing executive management team will remain responsible for the operational management of the Paragon group.